Commons Sense

House of Commons · Westminster Hall

Business Rates and Levelling Up

13 December 2022 · 4 other contributors · 11,218 words

Opened by Peter Aldous Con Waveney

Responding minister: Victoria Atkins

EconomyTaxationBusiness & Trade

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Peter Aldous raised concerns about business rates and levelling up in Westminster Hall. A government minister responded.

Key points

  • The current business rates system is seen as a fixed cost that hinders regional growth and deters investment in certain sectors.
  • Businesses and MPs call for a reformed system with a lower uniform business rate multiplier and yearly valuations for greater fairness and responsiveness.
  • The minister noted recent reforms including doubling small business rate relief thresholds and extending transitional relief for businesses.

Key requests to Government

The Government should introduce a fundamentally reformed business rates system with a lower uniform business rate multiplier and annual valuations, alongside simplifying the relief structure. Specifically, reduce the UBR from 51p to 34p as it was in 1990, implement yearly valuations to reflect market movements accurately, and digitize the VOA systems for efficiency.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Peter Aldous Con Waveney

The current business rates system is a fixed cost that impedes regional growth, with businesses having to contend with high inflation, soaring utility bills, and stubbornly high rents. With the rateable value of properties assessed at up to half the rental value in many cases, it deters investment in retail, leisure, and hospitality sectors. Additionally, there are concerns about the transparency and fairness of property valuations conducted by the Valuation Office Agency (VOA), which often leads businesses to pay rates bills that exceed their actual rent.

Other contributors (4)
  • Derek Thomas Con St Ives

    Mr. Thomas argued that business rates are arbitrary and unfair, taxing the existence of a business irrespective of its economic activity, particularly harming large independent businesses in town centres compared to out-of-town and online businesses. He highlighted a case in Penzance where a dry dock facility faces closure due to high business rates despite significant investment, undermining competitiveness. Additionally, he discussed how the VAT threshold affects small businesses in coastal areas, discouraging them from expanding during shoulder months or winter seasons.

  • James Murray Lab Co-op Ealing North

    Mr James Murray highlighted the impact of outdated business rates on small businesses, citing ONS data showing 137,210 business closures in Q1 2022. He stressed that online retailers benefit disproportionately compared to brick-and-mortar shops due to lower business rates and called for a new system of business taxation.

  • Jim Shannon DUP Strangford

    Jim Shannon supported the levelling-up agenda but expressed concern that it does not adequately address the needs of coastal communities. He highlighted that most businesses in Northern Ireland are microbusinesses with fewer than 10 employees, and many struggle due to small increases in business rates, which can mean business owners work for less than minimum wage. Shannon also pointed out that pubs pay more in business rates per pound of turnover compared to other businesses and called for a review of the hospitality sector's rates. Mr Jim Shannon noted that microbusinesses in his constituency have asked him about the revaluation of business rates and suggested reviewing it positively to address their concerns.

  • Kevin Foster Con Torbay and South Devon

    Discussed the impact of business rates on coastal communities, highlighting that levelling up should not be based on a north-south divide. Emphasized the need to address challenges in areas like Torbay where wealth coexists with poverty. Noted that business rates can penalize businesses for investing in physical infrastructure and can be a make-or-break factor due to inflexibility and high costs, especially for retail, hospitality, and tourism sectors. Mentioned examples of companies facing significant financial burdens due to increased utility costs and business rates. Called for further relief measures for small and medium-sized enterprises and advocated for a major review of the taxation system. Mr Kevin Foster intervened, questioning the Minister about specific locations where investments are being made in commercial property, suggesting there might be an issue with investment not reaching town centres.

Government Response

Victoria Atkins

The Government announced a substantial support package for business rates in the autumn statement, including doubling small business rate relief thresholds and providing £16 billion in pandemic relief. The minister explained that while a radical overhaul or abolition of business rates is not considered, meaningful changes have been made to improve fairness and responsiveness. She mentioned reforms such as more frequent revaluations every three years, extending transitional relief for businesses facing bill increases due to inflation, and providing significant support through the retail, hospitality and leisure relief scheme worth £13.6 billion over five years.

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