Labour was today accused of ‘taxing the high street into bankruptcy’ through their punishing ‘stealth’ levy on small firms.
Since Rachel Reeves quietly reduced much–needed reliefs last autumn, family-run pubs, bakeries and restaurants have been battered a rise in business rates.
Startling figures recorded by one council reveal an independent pub was stung by a 226 per cent hike in fees, costing them almost £17,000 for one year.
Meanwhile, supermarkets escaped with rises of as little as one per cent in business rates, which are similar to council tax for non–domestic properties.
Although MailOnline has only obtained business rate rises for Central Bedfordshire Council (CBC) – an area that covers Leighton Buzzard, Dunstable and Biggleswade, experts warn the situation will be mirrored up and down the country.
Councillor John Baker, who controls the pursestrings at CBC, said: ‘The government seems totally incapable of controlling public spending, clobbering business to fund its profligate behaviour.
‘If the Chancellor is serious about improving the poor economic climate, reversing those outrageous hikes in business rates and allowing businesses to hire more people would be a sensible first step.’
Department stores and supermarkets are also in the firing line in the Chancellor’s next Budget. In hope of clawing back billions, Ms Reeves is expected to increase business rates for bigger firms – despite warnings it will only accelerate the decline of the high street and lead to price rises.
In last autumn’s budget, Ms Reeves boasted that she was extending business rates reliefs for retail, hospitality, and leisure.
But she actually reduced the Covid-era discount from 75 to 40 per cent – capped at £110,000 across an entire business.
Smaller businesses are typically the biggest beneficiaries because they have fewer locations to spread this discount across.
During the same budget, branded a ‘disaster’ by critics, Ms Reeves hiked employer National Insurance contributions and cut the threshold at which firms become liable to pay them. The minimum wage also rose to £12.21 an hour.
The Federation of Small Businesses warned the triple whammy posed ‘an existential threat to the future of the high street’.
Paul Wilson, the FSB’s policy chief, told MailOnline the 40 per cent relief was ‘scant consolation for a squeezed business owners trying to find thousands of pounds’.
He said businesses couldn’t fight back by hiking their own prices because customers ‘can only afford so much’.
Job cuts and shorter opening hours – caused by businesses trying to claw back cash – risked handing bigger players an even greater advantage, Mr Wilson claimed.
He said: ‘The feedback were are hearing is that businesses are having to take those difficult decisions to scale back. High street businesses are questioning whether they can genuinely afford to keep competing with online.’
The FSB’s latest survey showed a record 41 per cent of small businesses now believe the tax burden is a top three barrier to growth.
In Bedfordshire, local pubs and restaurants have seen their rates more than double.
Data provided by Cllr Baker shows this costs businesses as much as £25,000 a year – more than a minimum wage full–time workers’ annual salary.
Award–winning pub, the Black Lion, on Leighton Buzzard High Street, was hit with a 226 per cent rise (£16,900) in its rates, from around £7,400 to £24,300.
By contrast, many big supermarkets such as Tesco, Asda and Sainsbury’s saw their rates raise by less than two per cent.
Other firms have seen even bigger jump proportionally, including upmarket eatery Eileen’s by Steve Barringer – a MasterChef: The Professionals finalist – where rates have shot up 260 per cent, from £300 to £1,080.
Our analysis suggested that, on average, independent food and drink venues saw a 120 per cent rise in business rates, compared to an average of just one per cent for bigger firms.
We have defined independent businesses as any which receives a relief designed to help what many would consider small or independent local firms.
This is wider than just the businesses that get ‘small business rates relief’, which only applies to property with a rateable value of less than £15,000 and if the business has only one premise.
Husband and wife Anthony and Anne Smith, who have owned and run two framing shops in Bedfordshire for the past 40 years, have been hit by a 150 per cent rise in their business rates.
It will cost them more than £5,500 extra a year.
Allframe, which employs half a dozen staff across the Leighton Buzzard and Dunstable sites, will likely have to raise their prices more than expected to cope, despite fears this could disrupt sales.
Mr Smith told MailOnline: ‘The problem you’ve got in any business when you get price increases is that you have to absorb the increase or put prices up.
‘We’ve tried not to put our prices up as we’re a luxury business.
‘People need to go to to Tesco and Aldi to put food on the table… but don’t need to get their pictures framed professionally.’
The picture framer added that rates rises will ‘ultimately go into it when we reevaluate prices’.
Mr Smith added: ‘Five thousands pounds is a lot to come off your bottom line in one fell swoop, when it’s something you weren’t expecting.’
‘It will mean our prices go up more than we would have liked them to. It’s going to impact on our profitability.’
‘I think there’s a general feeling that it’s always small and medium businesses that that get hit,’ Steve Watkins, cabinet member for business at Central Bedfordshire Council told MailOnline.
‘These businesses have struggled since the pandemic and have not been able to get back to where they were before.
‘The Government should target the big players in the market, rather than smaller businesses. Where’s the huge tax increases on Starbucks and Amazon?
‘If they want to regenerate town centres they are going about it the wrong way by making it harder for small businesses to survive.’
He said the added costs are making it ‘harder then ever’ for small business owners, who are already facing skyrocketing rents, energy bills and wage bills, adding that they were at ‘the end of their tether’.
In Labour’s manifesto, the PM pledged to replace business rates – which he said ‘disincentivises investment, creates uncertainty and places an undue burden on our high streets’ – with a new system.
Business rates are calculated based on multiplying the ‘rateable value’ – an estimate of the annual rent in April 2021 prices – by a multiplier of 49.9p for the smallest of businesses, and 55.5p for all others.
The Government announced last year it will permanently introduce a lower multiplier for retail, hospitality and leisure businesses with a rateable value of less than £500,000. The multiplier value is yet to be announced.
Cllr Watkins accused Sir Keir of ‘not being upfront with people’ over the reduction in the rates relief, saying the announcement was the ‘politics of spin’.
He said the rates were a ‘stealth tax’ on business and were not as ‘generous’ as the Government claims, adding they ‘absolutely have the possibility of taxing high streets and small businesses into bankruptcy’.
Cllr Watkins added that if the direction of travel continues, it was hard to see how local businesses will still be around in a few years time, leading to an ‘increasingly soulless high street’.
‘If this is the first step to reforming, I dread to see what the next steps will be, as these ones have gone down like a cup of cold sick,’ he added.
‘Technocratic governments are big on five to ten year plans, but these businesses need plans now.
‘The proof will be in the pudding… but the fact that they’ve not been upfront so far suggests we need to dig beneath the surface before I start clapping my hands.’
A Government spokesman told MailOnline: ‘Our reform to the business rates system will create a fairer business rates system that protects the high street, supports investment, and levels the playing field.
‘A new, permanently lower business rates in 2026 will benefit over 280,000 retail, hospitality and leisure business properties and will be sustainably funded by a new, higher rate on the 1% of most valuable business properties.’
