Tory MPs urge Rishi Sunak to cut high street business rates

Jake Berry, chair of the Northern Research Group, points to new research that suggests the public support tax cuts

Two “red wall” Tory groups representing more than 100 MPs have joined
forces to campaign for a cut to business rates in the budget later this month, warning that failure to act will risk the party losing a string of northern seats at the next election.

With many high streets across the UK scarred by shuttered shops, Jake Berry, chair of the Northern Research Group (NRG) of MPs, pointed to new research suggesting the public support cutting business rates to support their local retailers.

His call was joined by Esther McVey, the former work and pensions secretary and chair of another backbench pressure group, the Blue Collar Conservatives, who said cutting business rates was vital to the prime minister’s “levelling up” agenda.

McVey, who represents George Osborne’s former seat of Tatton, said: “The burden of tax on bricks-and-mortar retail is too high, and the best single policy to revive our high streets would be to cut business rates. Levelling up must include ensuring taxes come down.”

Together, the Northern Research Group and Blue Collar Conservatives represent more than 100 Tory MPs – almost a third of the parliamentary party.

A survey of 1,598 adults by Deltapoll found that 66% supported a tax cut for shops, increasing to 74% among voters in seats won by the Conservatives at the 2019 election.

“The public are clear: the burden of tax on bricks-and-mortar retail is too high. Without a cut in business rates at the budget we risk losing support in our most marginal seats, including in the North and the Midlands,” said Berry. “Cutting rates would be a huge boost to our local communities and would show quick delivery of the central mission of this government: levelling up.”

Rishi Sunak was due to announce the results of an overhaul of business rates in his March budget, but delayed it as he extended crisis measures to deal with the pandemic. Details are now expected to be announced in the budget on 27 October.

Smaller businesses including shops were granted an extended business rates holiday through the Covid crisis, but that came to an end last month.

Business rates, which were introduced in 1990, are based on the property value of a firm’s premises. Industry groups complain that the system unfairly penalises companies with bricks-and-mortar outlets against online retailers.

The British Retail Consortium has claimed four out of five retailers will have to close branches if the burden of business rates is not alleviated.

Recent research by the consultancy WPI Strategy suggested the seats where business rates represent the highest share of businesses’ profits include the Conservative-held marginals Leigh, Redcar and Hartlepool.

Berry, the former Northern powerhouse minister, was a backer of Johnson’s leadership bid but has recently become increasingly critical of government policy, including on the £20-a-week universal credit cut and the planned national insurance rise.

Backbench groups including the NRG and Blue Collar Conservatives have become more vocal in recent months, underlining the changed makeup of the parliamentary Tory party since the 2019 general election.

In his reshuffle last month, Johnson handed the new levelling up secretary, Michael Gove, the task of ensuring that voters in many of the seats the party won for the first time can see some progress by the time of the next poll, which must take place before December 2025 but could come much earlier.

The renamed Department for Levelling Up, Housing and Communities is expected to publish a white paper in the next few weeks setting out its approach.

Labour recently promised to scrap business rates altogether, saying it would replace them with a fairer system.

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