Labour plan to cut business rates welcomed by retail leaders

Labour’s plans to cut business rates for small businesses in 2015 and introduce a subsequent freeze have been welcomed by retail leaders.

However, they are calling for more details from Ed Miliband on how his plans would work across the sector.

The BRC said the plans, which the Labour leader is expected to announce in his conference address in Brighton this afternoon, were a recognition the system was “no longer fit for purpose”.

“We welcome this focus on supporting small businesses and high streets and the recognition that the cost of business rates has become unsustainable for retailers”

Helen Dickinson

“The UK business rates are the highest property taxes of any EU country and lead directly to vacant shops,” said BRC director general Helen Dickinson. “A consensus is emerging that the system requires total reform.

“We therefore welcome this focus on supporting small businesses and high streets and the recognition that the cost of business rates has become unsustainable for retailers.

“We are keen to discuss these proposals in detail with Labour to understand how they might form part of this more fundamental root and branch review.”

Miliband is expected to propose reversing a hike in small business rates due in April 2015 and to freeze the levy the following year.

Labour calculates its plans would be worth an average of £450 over two years to 1.5 million businesses, including shops, pubs and hi-tech start-ups, and up to £2,000 for some firms. They will be paid for by scrapping the coalition government’s planned 2015 cut in corporation tax from 21% to 20%, which has led to anger from groups including the CBI.

John Cridland, the CBI’s director general, told the BBC: “Reducing business rates for small companies is a good thing to do, but I wouldn’t do it by increasing taxes on investment, on research, in job creation, which is what will happen if you put up corporation tax.”

The ACS, meanwhile, welcomed Labour’s plans but also said it needed to form part of a “root and branch reform” of the business rates system. “Reducing business rates for smaller shops on high streets and in neighbourhoods would benefit tens of thousands of convenience stores,” said ACS chief executive James Lowman.

“We will work with opposition and the government to make proposals for tackling the rates burden workable.”

Step forward

The former Wickes and Iceland boss Bill Grimsey, who recently published an independent report on the high street, said the proposal was a big step forward. “You would never normally expect a political leader to talk about business rates in their annual conference speech,” he said. “But business rates have become one of the most out of touch, out-dated and unfair taxes and that’s why they’ve been pushed up the agenda.

“Politicians can no longer ignore the damage that business rates are doing to high streets. They have to act.”