Labour conference 2021: Shadow chancellor Rachel Reeves pledges to scrap business rates to boost ‘struggling’ high streets

A future Labour government would scrap business rates as part of “the biggest overhaul of business taxation in a generation”, shadow chancellor Rachel Reeves is set to announce.

In her address to Labour’s conference in Brighton on Monday, Ms Reeves will highlight how high streets are “struggling” due to the impact of the coronavirus crisis.

And she will claim firms are facing a “cliff edge” in March when a 66% relief on business rates – part of the government’s COVID-19 economic support package – is set to end.

Business groups welcomed Labour’s commitment to cut – and eventually entirely scrap – business rates as a “chronically overdue” move.

They also challenged government ministers to make a similar pledge to overhaul the levy on offices, shops, pubs, and warehouses.

In her Labour conference speech, Ms Reeves will say: “Our high street businesses do so much to enrich our lives and our communities, facing huge adversity in the past year.

“They are struggling right now, with a cliff-edge in rates relief coming up in March. The next Labour government will scrap business rates.

“We will carry out the biggest overhaul of business taxation in a generation, so our businesses can lead the pack, not watch opportunities go elsewhere.

“And here is our guarantee: the system we replace it with will incentivise investment, feature more frequent revaluations, and instant reductions in bills where property values fall, reward businesses that move into empty premises, encourage, not penalise, green improvements to businesses, and no public services or local authorities will lose out from these changes.

“Labour’s approach will be based on working together, with businesses, workers and public bodies all pulling together in a national endeavour to rebuild Britain and to seize the opportunities of the future.”

Business rates are paid by companies based on the value of the property they occupy.

In their 2019 general election manifesto, Labour had promised – if they won power – to “review the option of a land value tax on commercial landlords as an alternative” to business rates.

Last year, Chancellor Rishi Sunak announced a review of the business rates system but its full findings are not due to be published until later this autumn.

In her conference speech on Monday, Ms Reeves will also promise that a future Labour government would undertake a major review of existing tax reliefs, scrapping those that don’t benefit the taxpayer or the economy.

“There are hundreds of different tax breaks in the system,” she will add.

“Some are important but too many simply provide loopholes for those who can afford the best advice.

“For businesses they create extra layers of complexity to navigate, and added together they cost more than our entire NHS budget.

“We will look at every single tax break. If it doesn’t deliver for the taxpayer or for the economy then we will scrap it.”

Tony Danker, director general of the Confederation of British Industry (CBI), said that reform to the “outdated system” of business rates was “chronically overdue”.

“The Labour Party should be applauded for grasping the nettle and putting forward a pro-growth, pro-investment package of reforms that will reflect our green ambitions, spur the economic recovery, and help level up our regions.

“The CBI is keen to explore further how such a move could be funded and will review the party’s wider tax reform proposals.”

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Mike Cherry, the national chair of the Federation of Small Businesses (FSB), also gave a warm welcome to Labour’s pledge.

“The shadow chancellor is right to propose concrete reform of a business rates tax which disproportionately burdens the small businesses and sole traders at the heart of local communities,” he said.

“It’s good to see that the opposition has adopted our proposal to increase the ceiling for small business rates relief to £25,000, which we submitted to the government’s fundamental review.

“The gauntlet has been thrown down by the opposition, and we hope government ministers are listening. This is what a pro-small business tax policy looks like.

“Business rates is a regressive tax which hits firms before they’ve made a pound in turnover, let alone profit, whilst disincentivising sustainable investment.”

Responding to Labour’s business rates announcement, Conservative Party co-chair Oliver Dowden said that government ministers were “getting on with the job of helping our businesses to thrive”.

“We supported our industries through the pandemic with a £400bn package that included lower taxes, generous cash grants, a business rates holiday, and the furlough scheme, and we are now helping them to flourish as we build back better through our Start Up Loans programme, apprenticeship support, and Kickstart Scheme,” he added.

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