Northern Tories call on Rishi Sunak to cut business rates and prevent more shop closures

Thirsk and Malton MP Kevin Hollinrake is among a group of Northern Tories calling for “urgent action” from Chancellor Rishi Sunak on business rates to help high streets recover after the pandemic.

Chancellor Rishi Sunak has been urged to cut business rates.
Chancellor Rishi Sunak has been urged to cut business rates.

New research published today by the WPI Strategy political communications consultancy after being commissioned by retailers including Co-op, Morrisons and Waterstones, has warned that wtihout an urgent cut to the overall level of business rates, many more shops will end up closing.

Almost 9,000 shops closed in the first half of 2021 across the country, with 190,000 jobs lost between March 2020 and April 2021.

The research has found 17 per cent of shop units were vacant in Yorkshire & Humber, compared to just 10 per cent in London and said the burden of business rates – the amount of rates paid in proportion to overall profit - is highest in those places most in need of levelling up.

Mr Hollinrake, who is chairman of the property research group of MPs, said: “Urgent action is required to support our shops, our high streets and our communities to level the playing field between online and physical retailers. Making the business rates system fair has to be a priority.

"At the same time, we need to think carefully about how we implement such a move. Given the state of the public finances any tax cut has to be paid for somewhere else.”

Esther McVey, MP for Tatton and chair of the Blue Collar Conservatives group, said: “Reducing business rates for retail would have a significant and positive impact on those areas of the country most in need of “levelling up”. Cutting the ‘shops tax’ would unlock investment, creating jobs and growing local economies.”

Simon Fell, MP for Barrow and Furness, said: “We need to make it as easy as possible for businesses to set up shop in places like Barrow. The current business rates regime is hitting areas with boarded-up stores and struggling high streets the hardest.

"We must lower the cost of doing business and create the conditions for investment and jobs, especially for those sectors such as retail that employ so many local people, and play such an important part in the social infrastructure of a place.”

Other Tory MPs to demand a cut include Ben Bradley for Mansfield, Lee Anderson for Ashfield, and Dehenna Davison for Bishop Auckland.

The report warned: "Business rates receipts have increased from £8.8bn in 1990, when they were introduced, to £27.3bn in 2017-18, an increase of 210 per cent compared with a 75 per cent increase in inflation in this period.

"That means that the multiplier has increased from 35 per cent to more than 50 per cent over the past 20 years. In the past ten years alone, business rates have increased by 80 per cent for some retailers – these levels are not sustainable and, even worse, are disincentivising investment in the UK’s most disadvantaged areas."

Chris Walker, author of the report, said: “This analysis shows how a single policy change – cutting business rates - could deliver massive benefits to communities across the country but especially those in most need of levelling up.

"Most other taxes are linked to prosperity and are progressive, but in the case of business rates that system has broken down.”

The intervention by the Northern Conservative MPs - some in 'Red Wall' seats - comes after Labour's shadow chancellor Rachel Reeves said her party would eventually scrap business rates if they came to power.

Labour’s business tax reform would look to shift the burden from the high street to online giants, and end the tax relief afforded to private schools due to their charitable status.

Ms Reeves insisted the whole system of business taxation is not “fair” or “fit for purpose”, adding: “How can it be when bricks-and-mortar, high street businesses are taxed more heavily than online giants? High street businesses pay over a third of business rates, despite making up only 15 per cent of the overall economy.

“But when Amazon’s revenues went up by almost £2 billion last year, how much did their tax go up? Less than one per cent. If you can afford to fly to space, you can pay your taxes here on Earth.”

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