Labour will tomorrow renew its calls to slash business rates as it airs concerns that nearly 1m British jobs are currently at risk.
Shadow chancellor Rachel Reeves will pile pressure on Rishi Sunak to entirely reform the taxation system in his autumn Budget, while pointing out that figures from the Office for National Statistics (ONS) show 332,000 business are at-risk of closure in the next three months.
This includes 62,000 businesses in London, according to Reeves.
British businesses are facing several crises this winter as above expected inflation and runaway energy costs begin to bite.
The UK is also facing key worker and supply chain shortages that threaten to cripple the economy.
Mike Cherry, national chair at the Federation of Small Businesses, said the ONS figures “demonstrate just how desperate the need for [business rates] reform is”.
“Alleviating business rates will help as small firms face current cost increases, supply chain issues and the forthcoming hikes to National insurance,” he said.
The shadow chancellor announced in her party conference speech last month that a future Labour government would increase the small business rates relief threshold from £15,000 to £25,000, in what would amount to a tax cut for small businesses, while the Digital Services Tax would increase from 10 to 12 per cent temporarily.
Business rates would then be entirely abolished and replaced with a yet-to-be announced system.
Reeves will tomorrow bring forward a non-binding opposition day vote on her proposals, just one week before Sunak reveals his autumn Budget.
“[Businesses] are struggling right now, with a cliff-edge in rates relief coming up in March, and increasing shortages and supply chain issues increasing pressure and costs,” she said.
In the current system, business rates are based on a company’s “rateable” property value, with industry chiefs raising concerns about the lack of frequency in which property valuations are updated
Business groups have called for reform of the business rates system to also take into account the advantage it gives to digital firms who have less of a physical presence.
The Confederation of British Industry (CBI), alongside 41 trade associations, last week said up to 50 per cent of business investment can be caught by business rates under the present system.
The collection of business bodies wrote to Sunak to call for a complete business rates overhaul.
Speaking today, the CBI’s chief economist Rain Newton-Smith said: “The chancellor must use the upcoming Budget to reduce the burden of business rates. And ahead of Cop26, it’s self-defeating for England’s property taxes to disincentivise decarbonisation efforts.
“Any can-kicking – or further business tax rises – would be seen a lost opportunity by firms of all sizes given the desire from both business and government to really go for growth.”
The Treasury was contacted for comment.