Mel Stride Shadow Chancellor of the Exchequer
(Urgent Question): To ask the Chancellor of the Exchequer if she will make a statement on the planned changes to business rates for the retail, hospitality and leisure sectors.
Dan Tomlinson The Exchequer Secretary
Colleagues will have heard what the Prime Minister and the Chancellor have said on this matter in recent days. I will not add further comments on the specifics in responding to this urgent question. When there are further comments to be made, I am sure they will be made in the usual way.
At the Budget, the Government announced a comprehensive set of reforms to business rates. We have created a new, sustainable system with permanently lower multipliers for retail, hospitality and leisure businesses. Business rates are, in line with the usual timelines, revalued every three years, and new valuations that were set in train by the previous Government come into effect in April.
It was right to support businesses during covid, but the previous Government went into the election with plans to scrap the temporary support entirely in 2025. If they had won re-election, they would have removed that support overnight last April. If the Opposition had intended to extend the relief, why did they not say so and why was that not included in their forecast or projections?
We on this side of the House have chosen a different path: we extended the support at a lower rate in 2025-26 and are slowly unwinding it over the coming three years, with the help of £4.3 billion of transitional support. I think all Members can agree that it would not be sustainable for a £1.7 billion annual temporary covid tax relief to remain fully in place at the end of the decade. At the same time, our reforms—[Interruption.] I am glad someone is enjoying them. Our reforms to rebalance the underlying design of the business rates system towards high street businesses will be implemented in April.
The new, lower tax rates will be introduced for 750,000 RHL businesses, funded by a higher rate on the most valuable properties, including for the online giants. That is worth almost £1 billion and means that smaller high street businesses will have a tax rate that is 25% lower than businesses with the largest properties. That is being supported by a significant support package, as I said, worth £4.3 billion over the next three years. As a result, over half of ratepayers will see their Bills flat or falling next year, and around a third of properties pay no business rates at all, as they receive 100% small business rate relief.
I look forward to supplementary questions from the Shadow Chancellor, Sir Mel Stride, and other Members, and I look forward to seeing whether the shadow Chancellor can keep a straight face, given that he knows his Government never did enough for our high streets: 7,000 pubs closed over the 14 years the Conservatives were in power; shops were shuttered on high streets up and down the country; the council services that keep our high streets clean and vibrant were cut to the bone; investment was down; and the public suffered from the longest squeeze on living standards on record. That is the legacy for our communities—one that we are turning around.
John Whittingdale Conservative, Maldon
As well as pubs, hotels and restaurants, is the Minister aware that many grassroots music venues, some of which have never been liable for rates, now face demands for thousands of pounds? The Music Venue Trust has said that these are not Bills but “closure notices”. Will he ensure that grassroots music venues are included in any relief he provides, and are recognised as critical creative infrastructure?
Dan Tomlinson The Exchequer Secretary
We considered before the Budget the matter of businesses being brought into business rates for the first time. We set out at the Budget the supporting small business relief scheme, so that businesses that are paying no business rates at the moment but which are coming into business rates for the first time will have their increases capped at £800.
To watch the full clip of Sir John’s speech please click on the video link below:
