RUTH SUNDERLAND: Chancellor in the corporate rates betrayal
Betrayal: Chancellor Rachel Reeves
This is intended to be the golden time of the year for retailers. But the party atmosphere is dangerously sparse. Invoking Scrooge doesn’t even begin to do justice to the effect Rachel Reeves’ Budget is having on high streets across the country.
The chancellor has piled on the misery for shops and restaurants that have already battled to survive the pandemic, the rise of online retail and a business rates system that has been grotesquely unfair for years.
Instead of the anger subsiding after the budget, as Reeves hoped, it is rising to a boiling point as the consequences of her triple whammy become clear.
Shops and other venues are facing higher minimum wage costs, an increase in national insurance for employers and a stunning failure by the government to deliver on its promise to reform business rates.
Reeves’ budget is also a betrayal of her own gender: it is failing the millions of women who work in these sectors, often for low wages.
The row over National Insurance has taken priority, but unrest over business rates is simmering.
In its manifesto, Labor promised to reform the system.
Reeves spoke of “first steps” at the Budget, with a plan to introduce permanently lower rates for high street businesses operating from less valuable properties. This should be funded by a higher rate for larger premises, which Labor says take up the warehouses used by online giants. However, the crisis will also affect larger physical retailers, such as supermarkets.
This may be fair enough on its own, but it’s a jam tomorrow, if that ever happens.
The ‘intent’ – a lame word if there ever was one – is that these changes will take place from the 2026/27 tax year. In the meantime, smaller businesses on the high street will see their rates cut from 75 per cent to 40 per cent in 2025/2026 with a cap of £110,000, so will have to pay significantly more.
Labor cynically pretends this latest move is an advantage, claiming the Tories would have scrapped relief entirely.
Silly scoring does not help small retailers, who will have to find thousands of euros extra anyway. Business rates bring £26 billion of much-needed cash to local economies, so reforms must be sustainable.
But Mail and Mail on Sunday have been campaigning for fairer business rates for years.
The government had ample time to formulate its plans. It doesn’t have to be postponed for at least another year.
That will be too late for many, including long-standing family businesses, which will open the shutters before the miraculous new regime arrives.
Britain has already lost 6,000 stores in the past five years, with business rates playing a role in the decision in two-thirds of these closures, according to the British Retail Consortium.
Without action, the BRC estimates that a further 17,300 stores will close over the next ten years.
Those businesses that remain open are likely to downsize, cut workforces and drive up prices, fueling inflation.
Reeves seems obsessed with coddling public sector workers, so it may have escaped her notice that retail is the largest employer in the private sector, employing millions, most of them women.
A bitter irony is that this country’s first female chancellor – who wants to be seen as a role model for young girls in their careers – risks being responsible for the unemployment of large numbers of other women.
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