Philip Hammond’s snub to the high street: Chancellor refuses to overhaul toxic tax killing local shops
- MPs said they are planning an investigation into whether rates are fit for purpose
- Bosses at leading chain Primark said many firms were ‘overburdened’ with taxes
- Major retailers demanded a levy aimed at online stores to offset business rates
Phillip Hammond was accused of betraying struggling high street retailers yesterday after he refused to launch an urgent overhaul of business rates.
The Chancellor insisted there will be no imminent change despite warnings the tax is killing off firms.
In a letter to MPs, he said he would not examine the issue until he has considered reforming other corporate taxes.
Phillip Hammond insisted there will be no imminent change despite warnings the tax is killing off firms
Around 50,000 retail jobs have already been lost since the start of the year, and about 61,000 stores have shut in the past five years.
The Chancellor’s stance was described by former Wickes and Iceland boss Bill Grimsey – the author of a report on saving town centres – as ‘divorced from reality’.
It came as:
The chief executive of fashion firm Superdry backed the Mail’s Save Our High Streets campaign and called for ministers to act.
MPs said they are planning an investigation into whether rates are fit for purpose.
Bosses at leading chain Primark said many firms were ‘overburdened’ with taxes.
Major retailers in London’s West End demanded a new levy aimed at online stores to offset business rates
Launched on Monday, the Mail’s campaign calls for an overhaul on taxes to ensure that online giants do not get preferential treatment over traditional retailers. It has already received the backing of a string of major stores.
Business rates – based on the value of the property a firm is based in – have become a toxic issue for retailers. Stores complain they are penalised for having town centre properties, while online retailers that make millions more in sales are charged a fraction of the amount because they can rely on vast out-of-town warehouses.
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Bricks and mortar retailers are saddled with a rates bill of £7.2billion a year, while online rivals such as Amazon pay £457million between them.
Former Tory minister Nicky Morgan, chairman of the Commons Treasury select committee, wrote to the Chancellor last month urging a review of business rates.
Her committee is planning an investigation into the tax later this year. In a letter in response, published yesterday, Mr Hammond said a 2016 review had concluded that rates should not be axed.
He also said another inquiry into how to tax digital firms was under way, adding: ‘It is right that we make further progress on this issue before considering the implications for the wider tax system, including business taxes, so that all businesses make a fair contribution to the public finances.’
However, former Wickes boss Mr Grimsey, who called for an end to business rates in a report published this week, said: ‘This is totally dispiriting for independent high street retailers, and it shows a total lack of understanding of the economic challenges that entrepreneurs face.
‘It’s completely divorced from reality, it’s just ignorance, and sounds like someone speaking from behind the comfort of a desk.’
Mike Cherry, of the Federation of Small Business, said the Chancellor should ‘level the playing field’ by using tax revenues from internet giants to remove hard-working small firms from the business rates system. James Lowman, of the Association of Convenience Stores, said the ‘time for warm words has long passed’.
Dan Simms, of property business Colliers International, added: ‘If you lost 50,000 jobs in the steel industry there would be a march on Whitehall.
But because it’s a few jobs lost here and a few jobs there, the Government is happy to just let the industry bleed out.’
The Mail’s campaign, which also calls for cheaper car park fees, has been backed by the bosses of some of Britain’s biggest businesses, including Marks and Spencer and the John Lewis Partnership.
Euan Sutherland, chief executive of fashion firm Superdry, said: ‘We’re very supportive of the campaign.
Anything we can do to give a clear environment for retailers to prosper has to be a good thing.’
John Bason, finance director of Associated British Foods, which owns Primark, said: ‘If we want a thriving high street we’ve got to make sure we don’t overburden the high street with cost.’
Yesterday Liberal Democrat leader Sir Vince Cable pleaded for a re-think, adding: ‘The Treasury shouldn’t be able to bottle out of this.’
And Tory MP Jacob Rees-Mogg added: ‘Rates now seem to do more damage – especially to high street retailers – than the revenues they raise, so reform is required.’
A Treasury spokesman said more than £10billion of business rate support has helped retailers across the country, but an expert panel will be set up to ‘diagnose the issues affecting the health of our high streets’.
Internet shopping giants should pay a 1 per cent sales tax to ease the business rates burden on high street stores, a major retail group has said.
The New West End Company, which represents business in London’s premier shopping district including Selfridges, said it would raise £5billion a year which could be used to make average cuts in business rates of 17.5 per cent.
The Mail visited Philip Hammond’s constituency yesterday to see what they thought of the Chancellor’s attitude towards small businesses.
In Weybridge, Surrey, where Mr Hammond was voted into office in May 1997, local businesses laid bare the daily struggle they face and hit out at their MP over his lack of help.
LIVELIHOOD AT STAKE
Sue Bridger, 59, has run cafe French Fancy’s with daughter Tashana French after they built it from scratch three years ago.
But spiralling costs are already threatening to put them out of business like so many before them.
Mrs Bridger, who has lived in Weybridge for around 20 years, says the high street is a shadow of its former self. ‘It used to be a busy town,’ she said. ‘There were shops for the rich and shops for the poor. Now the wealthy just get in their taxis to Kensington to do their shopping. People have been coming in here asking me where all the shops have gone.’
Incredibly, Mrs Bridger wasn’t aware that Mr Hammond – the man with the power to save the high street – is her MP. ‘I never see him around. If he did come down perhaps he would realise what a mess the place is,’ she said.
Inci Malik (left) says spiralling costs have seen her forced to lay off staff at artisan cafe Aromas while Jay Patel has faced crippling business rate increases at her newsagents
Business rates on her shop have risen from £10,000 to £11,500 since April, having already increased from £9,000 in 2016. ‘Independent shops are community institutions,’ she said. ‘I like the fact that an 80-year-old grandmother can come in for some company as well as a coffee. If we had to close, that is what I would miss the most.
‘This is our livelihood at stake.’
Meanwhile, Inci Malik says spiralling costs have seen her forced to lay off staff at artisan cafe Aromas.
Her business rates have soared year-on-year, increasing from £13,329 to £14,478 for 2017-2018 after they started at £11,000 when she moved to the town in 2015. The rateable value of the property has risen from £24,000 to £32,750 in that time.
Business rates are now equivalent to 6 per cent of her turnover.
The 42-year-old said: ‘It is inevitable that we will go out of business if this keeps up. Last year I had to lay off four of my full-time staff. It was upsetting to do. I am now working seven days a week.’
Miss Malik urged the Chancellor to stop increasing rates for small shops and focus on ending tax avoidance by large corporations.
She said: ‘There’s a Starbucks next door – it’s unfair they get an easy ride, when people like us who are part of the community get hit.’
HE DOESN’T CARE
RAJ Patel said Mr Hammond was not interested in the plight of small businesses in his constituency.
Mr Patel, who owns Weybridge News, said he was ‘unsurprised’ by his MP’s ‘negative’ attitude.
‘I had a meeting with him about four years ago,’ he said. ‘He didn’t seem to be very clued up about our situation, nor did he seem particularly interested.
‘Most of the time he is here, he is just hanging around outside Waitrose in the run-up to an election.’
The 48-year-old, who has run the newsagents with his 46-year-old wife Jay for a decade, said he has faced crippling business rate increases.
Spiralling costs are already threatening to put Tashana French out of business
‘These rates are unfair when you compare them to shops that are not on the high street,’ he said. ‘Some of those are much bigger than ours, but they don’t have to pay anywhere near as much.’
He said fewer customers and business closures had created a vicious cycle of decline.
‘A lot have already moved out, which has been bad for us because not as many people come to the town any more.
‘It has been in steady decline. It is becoming a bit of a ghost town.’
WE’LL CUT STAFF
HUSBAND and wife Ali and Elena Vahedi say rocketing rates will force them to cut staff at their Italian restaurant.
Their restaurant Osso Buco has been hit with a 67 per cent increase in its rateable value, from £44,500 to £74,000.
Since April last year, they have had to find an extra £3,500 a year after their annual business rates increased to £25,683 from about £22,000.
Mr Vahedi, who has owned the restaurant for seven years, said they will have no choice but to cut jobs and that business rates threatened to ‘destroy’ the high street.
He said: ‘It will be a big problem, the Government and the council are squeezing us from every angle.
‘We can’t cut wages and we can’t put prices up or we will lose customers. So the only way we can get that extra money is to employ less staff and cut jobs.’
The 52-year-old added: ‘It shows the Government are out of touch. They don’t seem to understand every penny counts, even a 1 per cent rise has a huge effect.’
Mr Vahedi called on Mr Hammond to do more to protect small businesses in his constituency.
‘We are looking at a future when there will not be a single independent business left in Weybridge,’ he warned.
LAST NAIL IN THE COFFIN
EVE Moreve, who owns a women’s fashion store, said soaring rates could be the ‘final nail in the coffin’ for independent shops in the town. The rateable value of Mrs Moreve’s shop, Ben Vestito, has increased from £11,250 to £15,750, taking it above the business rates threshold and meaning she will have to start paying annual rates of £5,831.
‘It’s ridiculous,’ she said. ‘High streets everywhere are dying as it is and for many shops this will be the final nail in the coffin.
‘I don’t think Philip Hammond has any interest in his local constituency. It seems like the Government want every small business to close.
‘Everything they do is geared towards helping big businesses. It’s just wrong. It doesn’t make any sense.’
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