Business ‘battered and betrayed’ by botched enterprise charges reforms

Rachel Reeves is facing a mounting backlash over her botched business rates reforms as industry leaders warn crippling taxes are ‘killing high street firms’.

A chorus of some of Britain’s largest business groups told the Mail the Chancellor deceived employers by promising to introduce a fairer system of property taxes – only to do the opposite in the Budget.

Andrew Goodacre, the head of the British Independent Retailers Association (BIRA), which represents around 8,500 stores, said firms have been ‘battered and betrayed’ by Labour.

Jonny Haseldine, at the British Chambers of Commerce, said: ‘Christmas is often a make-or-break time for many firms, and the business rate changes announced at the Budget have increased the sense of festive worry.’

The Chancellor had promised to pay for a reduction in bills for smaller firms by hiking taxes on larger properties to ‘level the playing field between the high street and online giants’.

But it emerged that bills will still rise for many small businesses.

Doing the opposite: A chorus of some of Britain’s largest business groups said the Chancellor deceived employers by promising to introduce a fairer system of property taxes

Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), said: ‘High street small businesses – pubs, cafés, salons, grocers, and the other independent traders who add colour and life to our towns and communities – did not see the help with business rates they wanted and needed from the recent Budget.

‘In particular, many small retail, hospitality and leisure businesses will see their bills shoot upwards next spring and over the coming years, and concern is rising that a higher business rates bill could be the final straw for many small firms.’

According BIRA, the changes will see the rates bill on an Amazon warehouse in Coventry rise by 11.5 per cent while a Sainsbury’s superstore nearby will see its rates fall by 7 per cent.

But a small retailer in the same town will be hit with a 15 per cent increase.

Goodacre said the Chancellor ‘took the opportunity to do as little as possible and is asking the smaller businesses to bear more of the burden’.

Small businesses are unhappy as they will receive a 5p discount on the ‘multiplier’ used to calculate a final bill, despite pleading for a 20p reduction.

The small discount will be wiped out by increases to businesses’ rateable values, which are set to increase for many businesses next year.

And the Government has also hit firms by taking away a Covid-era relief discount.

The pain has been felt beyond retail and hospitality as a multitude of firms are set to see painful increases next year, according to analysis by tax firm Ryan.

Pharmacies’ rateable values will increase by 11 per cent while salons and offices will both rise by 14 per cent – spelling huge increases to their bills in April.

Its analysis had already revealed that around 3,480 retail properties will pay an extra £112m in rates from April.

Frustration has also been expressed by airports. Gatwick yesterday said it would increase its drop-off and pick-up charge from £7 to £10 as its rates bill will rise from around £40m to £90m over the next three years.

Muniya Barua, deputy chief executive at BusinessLDN, said increases were ‘dealing yet another blow to an already stalling economy’.

She added: ‘The reforms will lead to a huge hike in costs for some sectors, with the capital’s airports in particular expected to see a big jump in their bills at a time when they have ambitious investment plans for the UK.’

Ros Morgan, chief executive of Heart of London Business Alliance, said: ‘It’s not just bars, pubs and hotels that are facing shock increases in their rates bills next April. Our theatres, galleries and casinos, as well as offices and gyms, are all bracing themselves for bigger bills. Businesses and high streets are reeling as the implications sink in.’

More than 50 pubs have put up signs saying ‘No Labour MPs’ in a show of protest, according to restaurateurs in Dorset who started the campaign.

Anthony Pender, who runs the Somers Town Coffee House in the Prime Minister’s constituency, said: ‘What the Chancellor is claiming around savings and a positive policy is an absolute fallacy and I’m not entirely sure if it’s a lack of understanding or a concerted effort to deceive the general public.’

Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘Pubs have been let down. This Budget had the chance to back the sector with meaningful reform, but instead they gave us 5p discount which doesn’t touch the sides of astronomical new bills that will devastate landlords.’

CBI chief economist Louise Hellem said the government had taken a ‘rob Peter to pay Paul’ position.

Firms had been looking to the Budget with a mixture of concern and hopes for relief on rates – and it ended up as a ‘compromise position’, she said.

‘For those in retail and hospitality – particularly larger stores in retail – there was less support than they would have liked,’ warned Hellem.

‘But the government’s approach in this Budget was a bit of a kind of rob Peter to pay Paul situation.

‘It means that the hit to other sectors is potentially less than it would otherwise have been.

‘There have still been substantial increases in rate for many, particularly due to some specific impacts in some sectors like airports who have had a large increase in their bills.’