Business leaders lash out at Kwasi Kwarteng mini-budget after chancellor fails to outline plans to reform trade rates
Business leaders lashed out at Kwasi Kwarteng’s mini-budget after the chancellor failed to outline plans to reform trade rates.
Retail tycoon and former Dragons’ Den star Theo Paphitis said he was “very disappointed” that rates were “once again not addressed”. He insisted that “it would certainly have had a much more positive impact on the economy and jobs” than other reforms in the package.
High Street businesses face an £800m increase in business rates next year. The increases are tied to inflation, which is hovering around a 40-year high at 9.9 percent.
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There are concerns that the sector, hit by lockdown measures and now struggling as inflation hits consumer spending, will buckle under the weight of the additional tax burden.
Helen Dickinson, chief executive of the British Retail Consortium, said it was “inevitable” that the cost would “ultimately be passed on to families in the form of higher prices”, and called on the government to intervene. She said freezing fees “would stimulate investment and allow retailers to focus on what’s important: keeping prices low.”
Tina McKenzie, chair of policy and advocacy for the Federation of Small Business, said reforming rates was “the obvious next step to boost growth” and called for the threshold for small business rate relief to be raised, pulling plus payment of fees in full.
“Commercial rate reform was a promise from the 2019 manifesto, so we expect Team Truss to turn to this in the fall,” he added.
David Gregory, an associate at law firm Charles Russell Speechlys, said the failure was “a blow to small businesses that were hoping for additional support.”
Kate Nicholls, chief executive of UK Hospitality, said the Chancellor “missed two obvious levers” to make the UK tax regime globally competitive: a reform of commercial rates and the other a reduction in VAT. While Kwarteng announced VAT-free shopping for overseas visitors, Nicholls said a cut for domestic shoppers coupled with changes to trade rates would be a more immediate boost.
“Our VAT rate is the highest among modern economies, so if we want a globally competitive market, we need a lower VAT and a fair alternative to commercial rates,” he said. ‘Without such measures, thousands of businesses and many more jobs will be lost.’