The chancellor must keep his party’s promises

COMMENT It is not hyperbole to suggest that this could be the chancellor’s last chance to keep his party’s promises to cut business rates and support retail. We have recently seen the collapse of the Body Shop, which has joined the unenviable pantheon of major high street retailers to go out of business. The crisis is ongoing and so embedded that the Centre for Retail Research has a live tracker – Who’s Gone Bust in Retail? – to follow the mass of shop closures. We are only two months into 2024, and already 260 stores are at risk of shutting down, putting 9,931 jobs on the line.   Retailers across the country are weary of the extortionate business rates bills and the uncertainty that comes with the system of temporary reliefs that have been added in a piecemeal fashion to stem the tide of shop closures. The retail, hospitality and leisure relief, which gives shops a 75% discount on their rates bills is subject to annual renewals. The prospect of an increase in rates bills should the relief not be extended makes long-term planning impossible for businesses. No shortage of solutions Retailers will feel betrayed if the chancellor does not keep his party’s manifesto promises to reduce business rates, which the government has failed to do despite numerous opportunities since 2019. No one is immune to the injustices of this tax. It is telling that even large retailers are being driven off our high streets but spare a thought for those small businesses that are forced to navigate a system that becomes more complicated with every relief that the government invents to keep a broken system ticking over. There is no shortage of solutions to this problem for a creative and ambitious administration. This Conservative government is seemingly revealing itself to be neither, half-heartedly reacting to events rather than shaping them. The Shopkeepers’ Campaign has a long-term vision for reform that chimes with the Conservatives’ promise to reduce business rates for retail. A medium-term plan to bring down the multiplier to 30p in the pound over the course of the next parliament should be signposted and implemented. The high rate of 51p in the pound (soon to be 54p) is fixed and charged regardless of performance, which amounts to a tax on existence. We propose that this is reduced to a more affordable rate of 30p in the pound. This is a figure that shops can afford, meaning that the chancellor would be able to do away with the temporary reliefs that owe their existence to the unsustainably high business rates multiplier, whilst encouraging economic growth. Labour is listening In the short-term, the chancellor should consider undoing the planned increase in the standard business rate multiplier. Until business rates are at 30p in the pound, the retail, hospitality and leisure relief should remain, but without the current £110,000 cash cap. This would help all the branded chain stores – the Body Shops of our high streets – which perform a vital role in drawing people into places and which are most exposed to penal levels of business rates.   The Labour Party is listening. It has announced plans to abolish business rates and replace them with a system fit for the 21st century. The decline of our high streets urgently needs to be addressed. This is an issue that starts with an efficient system of taxation. If businesses are taxed at such a high rate for simply existing, how can we expect them to stay in our high streets and town centres? If nothing is done, or worse, if business rates are continually allowed to increase, we will see more and more closures on our high streets. This cycle is self-perpetuating. Communities and the retailers that serve them, will judge the Conservative Party harshly if it consistently fails to keep its promises.   Vivienne King is chair of the Shopkeepers’ Campaign