Which one of Labour’s ideas for business will the Tories pinch next, asks Ibrahim Dogus
Small and medium-sized enterprises are already facing an unprecedented set of challenges with Brexit looming and all the instability associated with it. Prices are rising, investment is slowing and SMEs are getting increasingly nervous. The overall climate is gloomy, and last month was the worst October for British retail since 2008. Now, hard-pressed businesses are facing the possibility of a four per cent rates hike.
Federation of Small Businesses national chair Mike Cherry has said that ‘the business rates regime is nothing short of a living nightmare for millions of small firms’, with seven months of ‘chaos’ since the ‘bruising’ revaluation of rates in April. Chancellor Philip Hammond is now under growing pressure to change course, with London mayor Sadiq Khan warning that independent and family business could be forced off of our high streets.
In recent months, Tory ministers have backtracked on a number of issues – having realised that the inflexibility brought about by years of cuts, austerity and under-investment cannot be sustained. In October, communities secretary Sajid Javid said that 300,000 houses need to be built every year to meet the United Kingdom’s housing after affordable house building sunk to a quarter-of-a-century low. Meanwhile, at the recent Confederation of British Industry conference, the prime minister spoke about a robust industrial strategy, despite the Tories having spent years scoffing at Labour’s planning for an industrial strategy. It might just be hot air, but the Tories have moved towards Labour on both issues – and more – in rhetoric at least. Now they must move towards Labour on business rates – the chancellor should ditch the proposed increases and kickstart a new, fairer deal for struggling SMEs and for British business as a whole.
Labour has repeatedly called for a review of business rates. It also proposed a raft of measures at the general election that would help SMEs navigate the choppy waters to come, including scrapping quarterly reporting and investing in local businesses through regional investment banks. What’s more, while raising corporation tax on those big companies that can afford to pay a little more, Labour will reintroduce the lower rate of corporation for small businesses, to be set at a low rate. This will reintroduce fairness into the system, helping to build an economy for the many.
More of Labour’s plans were outlined by Jeremy Corbyn at the CBI conference, where he said that the party seeks to ‘improve the functioning of business taxation wherever possible by uprating business rates in line with consumer price inflation instead of retail price inflation, moving to annual revaluations, and exempting new plant and machinery and by looking at staggering tax incentives for investment and innovation.’
As shadow business minister Bill Esterson stated at the Association of Convenience Stores annual conference recently, ‘it is clear that, amid continued business rates chaos and inaction from the Tory government, Labour is the party of SMEs.’ He used his platform to talk about the benefits of having yearly revaluations of business rates, rather than the current system of revaluations every five years, which leads to these sharp and damaging ‘shock’ increases that do not reflect the current realities of the market.
So, which one of Labour’s brilliant ideas for SMEs and business rates will the Tories pinch? Linking increases to consumer price inflation? Annual revaluations? New exemptions? Incentives? We have a full menu on display for the Tory policy-snatchers to feast on!
For the sake of our high streets, let us hope they do – in the process, not only helping SMEs up and down the country, but also once again proving that Labour has both all of the ideas and all of the momentum.
Ibrahim Dogus is co-chair of SME4Labour. He stood in the Cities of London and Westminster at the 2017 general election. He tweets at @ibrahim_Dogus
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