Budget Resolutions — House of Commons, 2020-03-11
Topic: Macroeconomics
Christopher James Evans (Labour, Centre-left): Thank you, Mr Deputy Speaker. May I begin by welcoming you back to your rightful place in the Chair? It is the first time you have called me to speak, since you were re-elected. We have often disagreed politically, but when I was a new MP looking for guidance and advice, you were always there. Like many Members of this House, I am grateful to you for your various courtesies and kindnesses over the years I also thank the right hon. Member for Forest of Dean (Mr Harper) for, again, a very insightful speech, though I did not agree with much of it. I must take issue with him. After my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) spoke, I was expecting him to mention that infamous letter. I feel that I have to mention the infamous letter that Reggie Maudlin wrote to James Callaghan in 1964. He said, "Sorry, cock, for the mess I’ve left it in." What is important is that the Government have to strike the balance between the pandemic of coronavirus and not inciting mass hysteria. I hope that that has happened today with the tone of the debate in this House around coronavirus. It is a virus that we do not yet understand, and that we do not have an antidote for, but what we have seen today in our reaction is the House at its very best The major measure that was put in place by the Chancellor today was the freezing of business rates, which will come, I am sure, as a welcome relief to those who are struggling throughout the country. Small businesses, particularly shopkeepers, are the beating heart of our communities. We can often measure the temperature of our economy by how well our high street is doing I have heard so many great maiden speeches today from both sides of the House. Everybody said how fantastic their constituency was and to come along for a visit, but how much of that is simply about the shopping in town centres? What worries me is seeing some of those town centres. Recently, I went back to where I grew up to drop off my wife to have dinner with my mother. We drove through the town centre, which I had not seen for a long time. The thriving bingo hall that I remembered is now a dilapidated building. I remember seeing boarded-up shops like I had never seen before, and bricked-up ATMs where the banks had moved on. The place looked like a ghost town; it was not something to be proud of, and it concerned me It is 16 months since the last Budget, and this country has changed beyond all recognition in the last 16 months. We have had three Chancellors, two Prime Ministers, a general election and Brexit, but at the same time our high streets have been absolutely devastated. We have lost 180,000 retail jobs to businesses going bankrupt or financial distress. Household names like Debenhams, Mothercare and Beales are now resigned to a past of black and white photographs from the 1950s and ’60s, when they thrived. Yes, it is difficult for retailers. It is difficult for the high street with juggernauts such as Amazon and when other online retailers are emerging every single day. How can small businesses and shopkeepers compete with one hand tied behind their back I welcome the business rates holiday for so many shopkeepers, but it is only a sticking plaster on the real problem faced by our high streets. Business rates have been described as "lunacy" and "perverse". The president of the CBI has called them "uneconomical, unsustainable, and…unintelligible." This was brought home to me most recently when I visited Tidal’s Store in Blackwood—a retailer of high-quality furniture and homeware. If any new MPs who gave their maiden speech today are looking to furnish flats or new homes in their constituencies, I would highly recommend Tidal’s. However, the problem it faces is that its business rates are three times as high as the retail park at the bottom of the high street. Many companies on retail parks are large, multinational businesses, and other retailers are not in a position to compete. Tidal’s is also paying more for its position on the high street than if it was further down the street. How can these companies expect to compete when they are paying four or five times more than others When I ask the Valuation Office Agency about the issue, I am told that this is the law. The agency says that it calculates the rate by multiplying the rateable value of the property by the multiplier, which has increased since 2017. That is hardly a comfort to shopkeepers who are struggling with this regressive, outdated tax. Equally, the council has told me that it collects the tax but cannot readjust it according to market rates, so even though it is desperately trying to save the high street by introducing free car parking, and through events that will bring people into the high street and town centre, it is hamstrung by business rates Companies in financial distress are not helped by business rates. According to The Guardian, Tony Brown—the former chief executive of Beales—said that the group’s punitive annual £2.8 million business rate bill suppressed any attempts to rescue the 23-store chain, which is now closing with the loss of 1,000 jobs. He cites Beales as an example of what could come The Chancellor announced a review of business rates, but for the business community this is simply a case of kicking the can down the road, when many businesses are at breaking point. The issue was looked at in 2014 by the Department for Communities and Local Government, and again by the Treasury in 2015, and there was a non-committal response from the Government to the Treasury Committee’s report just last year. Simply put, what confidence can the business community have in this Government delivering a change in business rates if they do not take the action that is needed now? It can be argued that a review will not change much if the Government are insisting on raising the same amount of cash from the same companies Under the present system, business rates allow retailers to be put at a disadvantage compared to those operating from cheaper out-of-town warehouses. Just to put this in perspective, Amazon’s bill last year was £63.4 million, almost £40 million less than Next’s. In my view, the Government have to introduce a 2% online sales tax to level up the playing field. Equally, they need to bring in a tax collection mechanism, similar to the way that VAT is collected, with a levy of 1% to 2% as a retail sales tax. It is estimated that this would bring in between £4 billion and £8 billion If we do not save our high streets, we see the knock-on effect on tourism, on apprenticeships and on employment. It is terrible to see well-loved high streets and town centres go to rack and ruin and become ghost towns. But there has to be a political will to act. Reviews are all well and good, but now is the time for action.