Business rates have turned high streets into cash cows for Government, says Rochdale MP Simon Danczuk

Danczuk, who has led the charge in Whitehall against business rates, this afternoon led a Westminster debate looking into the Government response to the high street.

He said: “While the Government has spent around £20m on Portas Pilots in the last two years they’ve increased the business rates burden for retailers by over £500m.

“Week in week out businesses in Rochdale regularly tell me that this tax is far too high and is dragging them close to the brink.”

Retail Week has been urging the Government to create a fairer business rates system after extortionate rates bills have led to retailers investing less and stunting job creation.

Danczuk also called on the Government to appoint a permanent minster for the high street to show a “clear, strong leadership from the Government” on the issue.

He accused the Government of being out of touch with the sector. Daczuk said: “The Business Secretary turned up at Retail Week Live and talked about accepting Mary Portas’ 38 recommendations, when there were only 28.

“The Secretary of State for Communities and Local Government is constantly in the newspapers using emotive language to talk about car parking charges while he continues to cut council budgets to the bone. 

“The Department for Communities and Local Government minister claims his unfair business rates revaluation delay is right – despite not one voice in retail supporting this move.

“The minister with responsibility for Portas Pilots and high streets carries out this role on a part time basis while he tends to his main duties as Housing Minister. And today we have a planning minister addressing the debate.”

Danczuk also accused Mary Portas of hijacking Government policy and turning the high street crisis into reality TV.

Nick Boles, the parliamentary under-secretary of state for the Department of Communities and Local Government defended the Government’s position. He admitted the business rates system may need to be changed over the “medium term” but added: “Although business rates will need to be taken into account with regard to the changes that we have been talking about there has been no shift under this Government that might explain the problems faced by our high streets.”

The debate followed the first evidence session at the Inquiry into the UK Retail Sector where British Retail Consortium director general Helen Dickinson gave evidence.

She said business rates are now a key deciding factor when calculating whether a new store opening is financially viable.

She explained: “I think it’s interesting if you look at the cost base of UK retail PLC and how that has changed over the last five years or so. If you delve into that, market-related costs, such as rent, have fallen while centrally driven costs have continued to rise so we’re now looking at a situation where business rates are becoming much more of a driver of the economic decision of opening a store as opposed to a tax that is expected on the back of performing well at that individual store level.”

Dickinson added that business rates may need to be fully reformed, in particular, agreeing that the business rates calculation should switch to being based on CPI rather than September’s RPI as it is currently.

She added: “I think what we need to bring in more effectively is looking at a closer link to how well a particular store is trading. At the moment there is no link between that and business rates.”

The Government should also look at levelling the playing field between taxes paid by bricks and mortar retailers and pureplay online retailers, according to Dickinson.