If you walk down your local high street in April and find more to let signs, shutters down and fewer staff behind the counter, don’t be surprised. For thousands of small shop owners, rising business rates are about to deliver a sucker punch. That’s because they expected more from a government whose watchword was ‘growth’. They expected ministers to use the power they have to protect them and help them to grow. They expected the same support that 40% rates relief for retail, hospitality and leisure gave them when the government adopted this in the previous autumn budget.
And why wouldn’t they? After all, these are the businesses politicians praise whenever they talk about strong communities and thriving high streets. It’s not like the pressure these firms are under is a secret, either. Rising utilities, ballooning employment costs and higher taxes are all taking a toll. Getting growth requires tough choices; if it was easy, it would already be happening.
Unfortunately, not using the full legislative powers to get more help for small businesses up and down the high street was due to big firms lobbying hard against any changes that would rebalance the system.
Sadly, those who will be hit hardest are the small firms we rely on day in and out: the butchers and the dry cleaners and the hairdressers and pharmacies. The bakeries and cafes and bookshops, the florists and pet shops, the gyms and jewellers.
The loss of the previous 40% discount, on top of April’s revaluation of the rateable value of premises, and changes to formula behind the bills, will be disastrous for our high streets and we explained to Ministers and their primary advisors the impact this would have.
We did our sums and we know that a typical small firm losing the discount will now face a 52% increase in its business rates bill over the next three years. £4billion in transitional relief sounds like a solution, when in fact it crystallises just how much bills will have to carry when it wears off – plus inflation.
But at the end of the day, the reason doesn’t matter because the outcome is the same: cutting staff, shorter hours and plans to grow put on ice.
Victoria’s Cheese in Ely, Cambridgeshire, is a prime example of what happens when you ignore high street firms. In only her second year of trading, owner Victoria Dunthorne already faces having to shrink her business thanks to a 66% increase in business rates.
Of course, support for pubs and music venues is welcome. But restricting relief to one sector and leaving out a whole other group rings hollow for those left out of yesterday’s announcement.
There’s still a chance. With more cost pressures due to hit in April alongside the rates rise – from energy standing charges to employment costs – the Treasury can – and must – look again at the spring forecast. This doesn’t have to end badly. With the right choices, ministers can still prevent the unnecessary damage facing our high streets.