'Red Wall' MPs call for retail business rates cut to support ‘levelling up’

The group of MPs who are members of the influential Northern Research Group of Conservative backbenchers, have written to the Chancellor as he puts the finishing touches to Wednesday's Budget.

The signatories include Lancashire's Jake Berry MP, who was previously Northern Powerhouse Minister, and the letter says: “We are writing on behalf of the Northern Research Group of Conservative MPs to ask you to use your forthcoming Budget to support our shops and our high streets and our communities.

"With many of our town centres hit particularly hard by the Covid-19 pandemic, now is the time for a bold move to reduce business rates nationally.”

The letter emphasises the need to move quickly to ensure retailers have the confidence to invest in their bricks and mortar stores and save high streets across the country.

Rishi Sunak has delayed the final report of a fundamental review into business rates – a key part of levelling the playing field between physical and online retailers – until the autumn.

But the letter from a significant caucus of Tory backbenchers will be seen as a show of force demonstrating that they expect him to take significant action to save the high street with bold tax-cutting measures on retail as soon as possible.

The MPs are urging the Chancellor to reduce rates as soon as the current rates holiday ends.

The Northern Research Group recently met a group of large and small retailers to discuss pressures on high streets and town centres, and to hear the case for a rebalancing of retail taxation between bricks-and-mortar and online retail, to better reflect changing patterns of consumer behaviour which have been accelerated during the pandemic.

The MPs are now backing calls for a significant reduction in business rates, which have now risen to over 50 per cent of market rent, back to their original rate of around 35 per cent of market rent.

They point to recent research by WPI Strategy which shows that the burden of business rates on shops is highest in constituencies that are most in need of “levelling up”, many of which can be found in seats gained by the Conservative Party in 2019.

Nearly 80% of constituencies with the highest rates burden (rates as a proportion of profitability) are in the North and Midlands. In constituencies like Bishop Auckland in the North East, for example, shops can face a rates burden eight times that of similar stores in the South East.

Commenting on the intervention, Rossendale and Darwen's MPJake Berry said: “The business rates holiday on retail, leisure and hospitality premises, announced by the Chancellor early in the pandemic, has undoubtedly saved hundreds of retail businesses and thousands of jobs.

"But in the longer term, fundamental reform of business rates is required.

“We have to level the playing field between bricks and mortar and online retail, recognising that online retailers currently face a lower proportion of rates per sale than physical shops.

“We need to make sure that once people can go shopping again, they have high streets to go back to.

"Physical shops are fundamental both for the economic future of our towns and cities, but also to create the strong social fabric which will help bind our communities together.

"They offer an experience that online shopping – valuable as it is – cannot match.”

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