10 March 2017
The Chancellor, Philip Hammond, did little on Wednesday to calm the storm around business rates when he delivered his budget to Parliament.
Speaking in Parliament, Simon Danczuk, Rochdale’s MP, warned: “I suspect that some business people will be sceptical about the Chancellor’s announcement that he is to conduct a review of business rates. The last Chancellor (Mr Osborne) proposed a review in the run-up to the 2015 general election, but we have seen nothing of it”.
In particular, towns like Rochdale have been at an unfair disadvantage because of the current system.
Simon said: “businesses in towns such as Rochdale have had to carry a disproportionate burden for additional years when their ratable value had actually fallen as a result of the impact of the recession. Businesses in London, and particularly in the south-east, were advantaged by the revaluation cancellation”.
Businesses in Rochdale and similar towns will now be sceptical about the new £50 cap on any business rates increase, not least because no such limit was offered to them when they were experiencing difficulties throughout the past four years.
The Chancellor also announced a £1,000 discount in business rates for 90% of pubs. Commenting on the discount, Simon said: “I suspect that it will not go very far”, adding that “it will be ‘small beer’ for pubs that face major business rate increases this year”. Simon has long been a champion of pubs, and backed the Baum’s successful bid for the Campaign for Real Ale (CAMRA’s) Pub of the Year 2012. The Baum faces a ratable value rise of 377%.
Raising the point that pubs’ business rates are based on turnover rather than rent levels, he said: “In many respects, that is a tax on entrepreneurialism”.
Simon also welcomed a £300 million discretionary fund for local government. He said: “Rochdale council has already led the way in devising a business rates reduction scheme to help new independent retailers in the town centre, so I understand the logic, but we now need to see how that £300 million will be shared between local authorities across the country”.
Simon praised measures from the Chancellor to help drive local economies: “I believe that the Government were right to adopt a 50% business rate retention scheme for local authorities, and I welcome the piloting of a 100% retention scheme”.
Looking forward, Simon proposed a vision for the future of rates reform: “First, there must be a proper review of the whole business rates scheme, including the Valuation Office Agency, which clearly is not fit for purpose. Secondly, I welcome councils retaining business rates, but the Government must now give local authorities more freedom over how they allocate, set and collect this tax. Thirdly, the Government needs to overhaul them to the point where they are seen as fair and equitable across all towns and cities in the country, not just some.”
Following the budget, Simon criticised the Government’s broken manifesto promise not to increase national insurance credits: “The Government should be encouraging entrepreneurialism. Instead, it is stifling the self-employed by raising taxes”.
On a more positive note, Simon welcomed the news that social care was to benefit from a £2 billion windfall. However, he was sceptical about the Government’s ability to deliver it: “There is no doubt that social care is the new frontline for our public services. I welcome the Chancellor’s commitment to provide an extra £2 billion. However, the Government must now ensure that these funds are allocated to local authorities fairly. I fear that it may not be enough to prevent the decline of social care into a postcode lottery”.