Business leaders slam Kwasi Kwarteng mini budget after Chancellor fails to outline plans to reform business rates
Business leaders have lashed out at Kwasi Kwarteng’s mini budget after the chancellor failed to outline plans to reform business rates.
Retail mogul and former Dragons’ Den star Theo Paphitis said he was “very disappointed” the rates “have yet to be addressed”. He insisted that this would “undoubtedly have had a much more positive impact on the economy and jobs” than the other reforms in the package.
High Street businesses will face an £800m rise in commercial rates next year. The increases are tied to inflation, which is hovering around 40-year highs at 9.9%.
Disappointed: Théo Paphitis owns the high-end lingerie chain Boux Avenue
There are fears that the sector, battered by containment measures and now struggling as inflation hits consumer spending, could cave in 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 ‘eventually be passed on to families in the form of higher prices’ and called on the government to intervene. She said the rate freeze would “spur investment and allow retailers to focus on what’s important – keeping prices low.”
Tina McKenzie, president of policy and advocacy at the Federation of Small Businesses, said rate reform was ‘the obvious next step to spur growth’ and called for raising the threshold for small business rate relief companies, further removing payment rates entirely.
“Commercial rate reform was a 2019 manifesto commitment, so we expect Team Truss to look to that in the fall,” she added.
David Gregory, a partner at law firm Charles Russell Speechlys, said the failure was “a blow to small businesses hoping for additional support”.
Kate Nicholls, chief executive of UK Hospitality, said the Chancellor “overlooked two obvious levers” to make the UK tax system globally competitive – one being commercial rate reform and the other reducing VAT. While Kwarteng announced VAT-free shopping for overseas visitors, Nicholls said a reduction for domestic shoppers alongside business rate changes 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 lower VAT and a fair alternative to corporate rates,” said- she declared. “Without these measures, thousands of businesses and many more jobs will be lost.”