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Hammond business rates cut turns screw on Mackay

Shop closures

High streets are losing out to the online retail market (pic: Terry Murden)


Chancellor Philip Hammond has put pressure on the Scottish government after cutting business rates and announcing planning reforms to help the struggling high street.

Mr Hammond is expected to hand a £900m tax cut to almost half a million high street retailers in his annual budget on Monday, helping them compete with online traders.

They will see rates cut by a third while a further £650m will be available over the next four years to improve infrastructure, under-used property and transport links in town-centre shopping areas.

The Treasury said: “This package will provide short-term relief for struggling retailers and a long-term vision for town centres, helping them to meet the new challenges brought about by our changing shopping habits.”

To qualify as a small retailer, business premises must have a rateable value of £51,000 or less.

Mr Hammond’s decision, ahead of Monday’s Budget, will force Scottish Finance Secretary Derek Mackay to consider following suit, or else put Scotland at a competitive disadvantage.

Mr Mackay has already said he has no plans to give local authorities the power to impose an additional out of town levy which is opposed by more than 30 trade bodies. He may now be forced to go further.

Commenting on the Chancellor’s proposals, Hannah Essex, from the British Chambers of Commerce, said: “We’re delighted that the Chancellor has heeded our calls to abandon the uprating of business rates for the high street for the next two years, and gone further by cutting bills for the vast majority of high street firms.

“It’s crucial that we support our town centres as they find their place in a changing world.

Ms Essex, policy and campaigns director, added: “An alarming number of high street firms, both large and small, are closing or being earmarked for closure. This deterioration has cost thousands of jobs since the start of 2018.

“While there are long-term structural changes taking place, including changes to consumer habits, the tipping point for many of these firms has been the unnecessarily large burden that business rates place on them. Therefore, this short-term reduction in rates will be very welcome news to those on the high street who require urgent respite.

“Business rates are a heavy burden that throttle all firms with steep bills regardless of how well they’re doing or the economy is faring. We have also called on the Chancellor to ensure that all businesses have a 12 month delay on increased business rate bills when improving an existing property or moving to a new premises. In the long term we will continue to call for fundamental reform of the broken business rates system.” 

On planning reform, Ms Essex said: “Greater flexibility in the planning system for mixed-use property is good news for those businesses that wear several hats, but we’ve already seen high streets being hollowed out by the encroachment of residential spaces.

“For high streets to thrive they need a balance of tenants, and we’ve already seen unintended consequences from previous planning reforms. 

“We need to be cautious about making it easier to turn business properties into residential ones, especially when demand for employment land is already at a premium. Sacrificing business land for the sake of housing leaves no room for the commercial spaces that are fundamental to job and prosperity creation on the high street and elsewhere.”

Rain Newton-Smith, CBI chief economist, said: “It’s no secret that the UK’s high streets are under pressure, with boarded up shops all too frequent a sight in many parts of the country.

“This is down to a number of factors, but one of the main culprits is a clunky business rate system and so this relief for small enterprises will be welcomed by many.

“The roots of the problem go far deeper though, with business rates giving larger retailers serious headaches, alongside manufacturers and logistics firms.

“There must be a wholesale review next year to deliver a system that encourages greater investment in digital, new technologies and energy efficiency.”

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