Simon Fell is MP for Barrow & Furness.
As Benjamin Franklin famously said, “in this world nothing can be said to be certain, except death and taxes.” Our business rates regime assures both: as a tax it is one of the biggest contributors to the death of high streets up and down the UK.
I see the consequences of this first hand in my own constituency of Barrow & Furness. Where once the high street was the beating heart of Barrow, the life is seeping away. Dalton Road, the high street in Barrow, was where local residents met up to shop, gossip and laugh. My constituency surgeries are full of residents and business owners telling me that something must be done.
And we must do everything possible to turn the tide. Covid-19 has hit the high street hard. But even before the onset of the pandemic, retailers – large and small – were struggling to cope with the ever increasing rise in business rates.
It is a regressive tax which is not fit for purpose. Since 1990, business rates receipts have increased from £8.8 billion to £27.3 billion in 2017/18, an increase of 210 per cent compared with a 75 per cent increase in inflation. The UK now has the highest property taxes in Europe, nearly double the rate of the next nearest country, and business rates is a large reason why.
It is a tax which hits hard-working business owners, it is a tax which is a barrier to investment, and it is a tax which costs jobs.
It imposes a double whammy on the high street too: we haemorrhage ‘anchor’ stores like M&S and Topshop which makes it harder to attract shoppers to our independent stores. Those independents are the plucky heroes of Barrow’s street scene and they thrive against all odds. We can’t allow them to pulled into the same downwards spiral.
This tax also hits the north hardest. New research today by WPI Strategy categorically proves that the business rates burden is highest in northern towns such as Barrow and Leigh. Using store data from the thousands of Tesco stores across England and Wales, the paper shows 75 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared to just 26 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.
The research shows that shops in the top 50 constituencies most burdened by rates have four times the business rates burden of those in the bottom 50. If the top 50 constituencies faced the same burden as those in the bottom 50, they would save £50 million a year.
It is even more important for constituencies such as mine that the Government does all it can to ensure retailers can survive and thrive. Retail makes up 25 per cent more of the job market in the North, Midlands and Wales than it does in London
During Coronavirus, retailers such as the big grocers, took on tens of thousands more staff to help feed the nation. The sector is also a stepping stone into the world of work for many people, offering apprenticeships for youngsters up and down the UK.
But retail provides more than simply an economic boon to northern towns. Shops play an important psychological and social role within neighbourhoods. They are often the only touch points for some of the more vulnerable members of our community.
Encouragingly, the Chancellor recognises the value of retail to our social fabric and economic prospects. At the start of the pandemic he announced that retailers as well as businesses in the hospitality and leisure sectors in England will not have to pay business rates for a year.
This was an extremely welcome move. There is further work going on here too: Town Deals and Future High Street Funds offer the chance to renew the high street and town centres like mine. But that renewal must be backed.
When the rates holiday comes to an end next year, we must continue to relieve the pressure on retailers. That is why I’m calling on the Government to introduce a permanent cut to business rates for retail. A 20 per cent reduction in the overall level of rates would make a huge difference to shop owners in towns like Barrow, Bury or Bolton. It would enable them to retain jobs, keep the doors open, and reduce the number of boarded up stores on our high streets.
Of all the low-hanging fruit available to the Government’s levelling up agenda, reducing business rates would be an easy win with an immediate positive impact.