Speaking at a Treasury Committee hearing on Wednesday 11 February, Dan Tomlinson, Labour MP for Chipping Barnet and Exchequer Secretary to the Treasury, defended the reforms amid mounting anger over soaring rateable values and misleading language from the Government.
Tomlinson said: “People did underestimate the impact of the unwinding, not internally, but externally.
“The individual businesses, who had to wait till the day of the Budget to see their rateable values, did probably underestimate the extent of the unwinding of the increases in their rateable values after the pandemic.”
He stressed while the Budget introduced “significant changes” to business rates, the Government opted for a 5p discount to the multiplier instead of the 20p that was originally legislated for to protect the country’s “fiscal sustainability”.
Go further
“Business rates generate £34bn a year [for the Treasury] …that is a significant amount of revenue,” Tomlinson said.
“Some people expected because [20p] was the maximum that was legislated for that was what the Government would do on the day.”
He added: “The Government has been as clear as we can be that our intention is not to reverse that 5p change; if we can we want to go further.”
Tomlinson, who described business rates as a “very complicated system”, also pushed back on claims the sector had long-standing concerns about the way pubs are valued.
He told MPs objections were raised after the Budget, not before: “Before the Budget, we hadn’t had strong and significant representations from the sector about the way they were valued.
“Different members of the industry had previously supported the guidance on how the methodology was applied to the evaluation of pubs.”
Withdrawing support
“There’s this group called the Pub Rating Forum, which consists of the British Beer & Pub Association (BBPA), UKHospitality (UKH), the British Institute of Innkeeping (BII) and some other important sector bodies”, he continued.
“On 2 December – so after the Budget – the BII withdrew their support for the guide that they had previously given their broad support to. The day after – on 3 December – the BBPA, UKH and SIBA also did the same thing. Other groups then did so later on.”
His comments come after the UK Statistics Authority (UKSA) said Chancellor Rachel Reeves “should have been clearer” about how the plans would affect pubs.
Meanwhile, business secretary Peter Kyle previously admitted the Government “didn’t have access” to full VOA data on rateable value changes ahead of the Budget.
Tomlinson, who was made Exchequer Secretary to the Treasury as part of Labour’s cabinet reshuffle last year, added he hoped to engage more with the sector as the Government continues to review the situation.
“We’re not saying now that at future Budgets the system will be abolished in its entirety, but we are looking at what we can do to significantly lower the burden on high street businesses.”
