Contribution
My Lords, here we are again, discussing yet another U-turn when the Government conclude, after public outrage at an announcement that they have made and after some tardy reflection, that perhaps they did not get matters right first time. What is offered here is not merely tardy but inadequate. It fails to grapple with the pressures now bearing down on small businesses across the country, especially from business rates.
It is essential that we look beyond the Treasury’s abstractions and confront the real-world consequences of the changes announced in the Budget, which remain even after this U-turn. Tina McKenzie of the Federation of Small Businesses has warned, following this latest announcement, that it simply proves that
“the Government repeatedly fails to recognise the difficulty that these businesses are in”.
I could not echo that more strongly. Andrew Goodacre, the chief executive of the British Independent Retailers Association, went further, describing the change as a “half-baked U-turn” and warning that independent retail is being “flushed down the U-bend”. He added, tellingly, that he could not recall a worse policy decision, cautioning that this poor decision was based on poor reasoning that will inevitably lead to more shop closures—and so on.
The Minister has said that he wishes to work with businesses but, in the face of this negative and consistent feedback from businesses themselves, especially from SMEs, it seems he has been unsuccessful in that aim. It is abundantly clear that the Statement addresses only a small fraction of the economic damage inflicted on businesses since the Government took office.
The inadequacy is not merely one of scale. The relief announced is, by the Government’s own design, temporary, so it is a sticking plaster applied to a deep and structural wound. One of the most persistent economic misunderstandings that this Government have displayed since assuming office is a failure to grasp what businesses actually need: clarity, consistency and certainty. Businesses do not want U-turns, short-lived reliefs, or promises trailed in briefings only to be withdrawn or reannounced days later, as we all saw before the Budget. This announcement exemplifies that failure in its entirety.
Worse still, everyone in the sector is saying that it is inadequate. If the Minister will not listen to His Majesty’s Opposition, perhaps he might listen to Labour Back- Benchers. Jim McMahon and Stella Creasy made the point that I am making in the other place just this week. When Parliament, publicans, business leaders and his own Back-Benchers are urging a reconsideration, what more is the Minister waiting for?
This is ultimately a question of credibility. Businesses do not measure that by press releases or promises of future strategies; they measure it by whether they can plan, invest and survive. What has been announced does not provide that certainty. It is limited in scope and temporary by design, and arrived only after external pressure became unsustainable. That is not how stable tax policy is made or how confidence is restored.
The truth is that confidence in hospitality and retail is fragile. We heard only this morning from Charlie Nunn, CEO of Lloyds Bank, that the sectors in question were having a challenging time. What assessment has the Treasury made of the number of such businesses that have already cancelled investment, reduced staffing or decided to close since the Budget because the Government have failed to provide clarity about their intentions?
If the Government truly wish to work with businesses, they must move beyond reactive concessions and bring forward a coherent, durable approach that treats the whole high street fairly and gives enterprises the certainty they need in order to grow. Until that happens, I fear this week’s announcement will be seen not as a solution but as an admission of failure.
The modest action on pubs is, of course, welcome, and a promise has been made to look at hotels, but will the Minister agree to look at rates for the wider retail, hospitality and leisure sectors before the next Budget? Thousands of shops, cafés, hotels, nightclubs, cinemas and theatres are still facing huge increases. The combination of higher taxes and rates, extra regulation and energy prices for business—four times those in the United States—is crippling these very sectors, and I hope the Minister will be able to promise some relief.