Labour 'would cut business rates for small firms'

By John Harrington

- Last updated on GMT

Related tags: Business rates, Small business, Tax

Ed Miliband: Labour is the 'party of small business'
Ed Miliband: Labour is the 'party of small business'
A Labour Government would freeze business rates for smaller firms and reverse a planned cut in corporate tax for larger companies, party leader Ed Miliband is expected to announce at Labour’s Conference today.

Reports in the media this morning suggest that Miliband will use his keynote speech to freeze business rates for companies with a rateable value of less than £50,000 at 2014 levels for three years from 2015. He will claim Labour is “the party of small business”.


Labour is expected to state that 1.5m firms would benefit. The average saving would be nearly £450 per year, with some companies saving £2,000.

It would cost £250m in 2015/16 and £540m in the following year.

The change would apply automatically to companies in England, with the money given devolved governments in Wales, Scotland and Northern Ireland to follow suit, according to the BBC.

'Heavily squeezed'

It follows a recent statement from Bill Grimsey, the former chief executive of Iceland, who is quoted in the Guardian saying: “Small businesses are being heavily squeezed by big rises in business rates and this is pushing many over the edge. Businesses have been crying out for help for years and Ed Miliband is the first party leader to demonstrate that he gets it.”


John Allan, national chairman of Federation of Small Businesses (FSB), commented: "The FSB welcomes the focus by the Labour leadership on this critical issue for small businesses. It affects thousands of our members across the UK and is an issue we've lobbied on for some time.

"Whilst we welcome today's announcement, the long-term solution is one that requires root and branch reform, including of the Valuation Office Agency. The system is clearly no longer fit for purpose."

He added that FSB research has shown that 7% of members pay more in rates than rent and many small business are forced by local authorities to pay high rates when it is beyond their means.


British Beer & Pub Association

“We would very much welcome a cut in business rates, though not through increased Corporation Tax, as we want to see the overall tax burden on business coming down.

“Business rates are a pressing issue for pubs. Current Small Business Rate Relief is due to expire in March, unless the Government decides to extend it further. We believe this will hit 16,000 pubs across England and Wales with extra tax bills of around £1,000 on average – the last thing they need.”

"I hope Ed Miliband’s announcement increases the focus on the impact high business rates are now having on pubs and as a first step, that the Government keeps the current Small Business Rate relief in place.”


Association of Licensed Multiple Retailers

“While we welcome Miliband’s recognition that that the current system of business rates is unsustainable burden, it is a cost and a headache which is holding back the potential for investment, growth and job creation for the sector as a whole, not just the smallest businesses.  

"We are concerned that the proposals are unlikely to deliver real and meaningful benefit for many. Average pub rateable values are now around £40k, meaning that even many small businesses will fall outside the scope of the rebate. More importantly, with rates bills still pegged to rents and rateable values set in 2008 - the height of the property market – Labour’s proposals may prevent the last price increase being applied to some, but will not dramatically reduce bills.

"What we need is a fairer tax system for the many not the few and tax breaks for small businesses will fail if they are granted at the expense of business as a whole. What we need is a  fundamental root and branch reform of the way in which rateable values are determined and business rates applied – more frequent revaluations and annualised CPI increases to ensure it remains responsive to economic circumstances. Take the brakes off and free us up to deliver our potential for investment, growth and jobs”

Related topics: Legislation

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