Labour have today released new figures showing 375,000 businesses
will be hit by changes in business rate relief on 1 July.
In addition, from 1 July, all businesses – including in sectors
hardest hit by continuing restrictions – will be forced to
contribute 10% towards the cost of furloughing employees. An
estimated 450,000 will be affected by this change.
Despite the government’s own border chaos leading to a spread of
the Delta variant and delaying the roadmap till 19 July,
Ministers have refused to push back the date for ending this
business support in tandem, meaning businesses forced to pay will
include those still legally closed or operating at a
significantly reduced capacity.
The figures commissioned by Labour to the House of Commons
Library show:
- Just under 400,000 businesses in England will be affected by
the cut in business rates relief for retail, hospitality and
leisure businesses from 1 July: Local Authorities have estimated
that 374,172 will be claiming the relief in July
- Affected businesses will lose business rates relief at an
average of around £1,200 per business
- Approximately 30% of affected businesses are hospitality and
leisure properties, 60% are shops and 10% are other types
including accommodation.
- This suggests that 225,000 shops, 112,000 hospitality and
leisure businesses and 37,000 other businesses will be affected.
- 450,000 businesses will have to pay £225 million more as a
result of the reduction in furlough generosity.
Labour has called on the Government to:
- Delay the increased employer contribution to furlough, given
that most of people remaining on furlough are employed in the
sectors affected by the ongoing restrictions – hospitality, live
events, accommodation and tourism.
- On business rates relief, learn lessons from the Labour-led
Welsh government, which has given the vast majority of businesses
100% business rate relief for the course of this financial year.
In contrast, the Conservative government is sending out bills to
businesses that cannot fully open.
Shadow Chief Secretary to the Treasury, said:
“The government’s reckless and negligent approach to border
controls is being paid for by British businesses now.
“A month’s delay may seem like a short time, but for businesses
in retail, hospitality and leisure, legally closed from trading
or relying on the summer season the delay is another blow.
“We want to see businesses make it through and thrive because
they are an important part of what makes our country great, and
essential for driving our recovery.
“The government must make sure economic measures go hand in hand
with public health measures and that our British businesses and
high streets are not left out in the cold.”
ENDS
Notes to Editors
Business rates:
- Just under 400,000 businesses in England will be affected by
the cut in business rates relief for retail, hospitality and
leisure businesses from 1st July: local authorities
estimate the figure will be 374,172
- Affected businesses will lose business rates relief at an
average of around £1,200 per business
- Approximately 30% of affected businesses are hospitality and
leisure properties, 60% are shops and 10% are other types
including accommodation.
- This suggests that 225,000 shops, 112,000 assembly and
leisure businesses and 37,000 other businesses will be affected
Furlough:
- The latest HMRC data suggests that 675,000 employers had at
least one member of staff on furlough.
- The OBR projects number of claims will fall by around a third
between April and July, therefore we estimate that around 450,000
employers will be affected by the reduction in support for
employee’s wages in July.
- House of Commons Library estimates that an average of around
£500 per employer less will be claimed in July, assuming a
similar average value of claims to April 2021 but funded at 70% not
80%.
- This suggests that businesses will have to pay 450,000
multiplied by £500, or £225m, more as a result of the reduction
in furlough generosity.
The House of Commons Library say:
- We can’t say precisely how many businesses will be affected
by the reduction in the business rates relief for retail, leisure
and hospitality. There are a few estimates of the numbers
eligible for the relief:
-
Local authorities
estimated that at July 2020, 374,172 properties were
eligible to the retail discount relief. MHCLG estimates that
at 31 December 2020, 394,601 properties were in receipt of the
retail discount relief (see supplementary data
tables).
- In March 2021, the OBR forecast
that across the UK business rates receipts in July 2021 will be
around £460 million larger than in June 2021.
- 370,000 properties, this is around £1,240 per property in
July 2021.
- These monthly estimates are very crude and the reality
amongst individual businesses will vary quite a bit, particularly
as some businesses will have their relief capped after June 2021.
- There isn’t data on the split of business rates retail relief
by sector of recipient.
- However, we can use Valuation Office Agency data to come up
with some broad estimates of the number of properties in retail,
leisure, and hospitality with a rateable value over £12,000. The
£12,000 cut off is important as properties below this may qualify
for 100% relief through the small business rates relief scheme.
- Roughly 60% of retail, leisure and hospitality properties
with a rateable value over £12,000 are shops, 30% are assembly
and leisure properties and 10% are other types.
