Industry welcomes Budget business rates cut but disappointment at lack of further action

Trade bodies have welcomed the temporary cut to business rates, announced by the chancellor Rishi Sunak in his Budget announcement on 27th October, but say they are "disappointed" no further steps are being made to change the business rates system to level the playing field between bricks-and-mortar and online retailers.

Business rates are to be cut by 50% for retail, hospitality and leisure companies for the next year, up to £110,000, a tax cut worth almost £1.7bn. The Chancellor also ditched next year's planned annual increase in rates. Sunak said that his measures, with Small Business Rates Relief, mean more than 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%. 

"Apart from the Covid reliefs, this is the biggest single-year cut to business rates in 30 years," he said. "We’re unleashing the dynamism and creativity of British businesses with a simpler, fairer, more competitive tax system."

Laura McCormack, head of policy and public affairs at the Booksellers Association, said after his speech: “Watching today’s announcement, we were glad to see the Chancellor use business rates to encourage investment, especially green investment. Many booksellers will also be happy with the short-term rates discount and cancelling of next year’s multiplier increase. However, we are disappointed that no steps are being taken to fundamentally change the business rates system to level the playing field between bricks-and-mortar and online retailers. This is a real missed opportunity for the government to show its support for booksellers and other responsible high-street retailers who support millions of jobs across the UK and are often at the heart of their local communities.”

Sunak stressed business rates needed to be retained, telling MPs: “We on this side of the house are clear that reckless, unfunded promises to abolish a tax which raises £25bn every year are completely irresponsible.” However, he said he would make the system “fairer and timelier” with more frequent re-valuations (every three years), starting in 2023. He did not mention an online sales tax at the despatch box, but the autumn Budget and spending review stated ministers will “continue to explore the arguments for and against” such a policy. The government said it would publish a consultation shortly.

Labour’s Rachel Reeves, responding to the Budget, said business rates still hold businesses back and criticised the chancellor for “refusing to tax the online giants” such as Amazon. She said that Labour would stop business rates and make sure the likes of Amazon “paid their fair share” instead.

Barbara Hayes, deputy c.e.o. of the Authors' Licensing & Collecting Society (ALCS), said she was "delighted" to see its calls to support high street bookshops through a change to business rates had been accepted by the Treasury and said the move will help small businesses in the short-term to recover from the pandemic. "Bookshops are vital in supporting a healthy supply chain in the book market, so we are pleased at the announcement of a 'modern business rates system' which will be fitting with the government’s initiative to level-up and support high street revival across the UK," she said.

She also welcomed the funding measures for culture, which included £850m for cultural and heritage infrastructure, alongside new funding for cultural bodies. However she said the government had "failed to acknowledge the creative workforce and instead has focused funding on institutions and buildings alone". She said: "This funding has failed to make it to authors in a meaningful way in the past, as little has been allocated to the literary field specifically.

"We are disappointed that targeted and effective recommendations for writers, such as an increase to the overall PLR fund, have not been introduced today. Authors contribute across the whole culture sector, from playwrights to academics to novelists. We hoped the Treasury would acknowledge the contributions made by our members to the successful creative economy both domestically and internationally, but will carry on engaging with the government on these issues.”

The Chancellor also announced that funding per pupil in England's schools is to be restored to 2010 levels over the next few years and pledged an extra £2bn for education recovery from Covid-19, and an increase in science spending to £20bn a year by 2024. 

Dan Conway, director of external affairs at the Publishers Association (PA), noted that there was "a great deal for the publishing sector to get its teeth into" in the Budget, particularly in relation to the education and academic sectors.

He told The Bookseller: “An uptick in schools and skills funding is always welcome, as is any additional catch-up funding. We are working with the government to see how we, as an industry, can support its important ambitions for lifelong learning.

“We also welcome the current government’s clear focus on making the UK a science superpower and its tangible steps towards this by boosting R&D investment. Finally, we’ll be watching the development of business rates policy and the potential Online Sales Tax (OST) very closely, and note the cut for the retail sector today, along with the announcement of the forthcoming consultation on the OST," he said.