Conservative MPs in the North of England are calling for a massive cut in taxes paid by shops, as Chancellor Rishi Sunak prepares to present his Budget statement on Wednesday.
Forty-five northern Tories from "Red Wall" seats have written to the Chancellor to call for a cut in business rates for retailers. They include Bishop Auckland MP Dehenna Davis and Sedgefield MP Paul Howell.
The MPs told the Chancellor: "We need to make sure that once people can go shopping again, they have high streets to go back to.
"Physical shops are fundamental both for the economic future of our towns and cities, but also to create the strong social fabric which will help bind our communities together. They offer an experience that online shopping – valuable as it is – cannot match."
And they warn that shops in the north are paying higher business rates than those in the south, as a proportion of their profits. The tax payable is based on the value of the firm's property, which means shops can pay similar rates even if their turnover and profits are very different.
The letter was co-ordinated by the Northern Research Group, which includes 45 backbench Conservatives.
Research conducted by consultants WPI Strategy shows that the burden of business rates on shops is highest in constituencies that are most in need of “levelling up”, many of which were gained by the Conservative Party in 2019.
They said in a new report: "In these areas, stores face four times the burden of more affluent areas and in certain areas it is much higher — a shop located in Bishop Auckland can face a business rates burden eight times that of a shop in Surrey Heath. This is simply unsustainable."
In an article written jointly with Leigh MP James Grundy, Ms Davison said: "High business rates amount to an unfair shops tax, reducing investment in the very places that need it most and which this government promised to level-up. It means hard-working business people are more likely to go out of business in areas where we desperately need more traders setting up shop.
"To those who represent constituencies such as ours, the answer could not be clearer: a reduction in business rates could give a huge boost to the levelling up agenda.
"That is why we, along with our colleagues in the Northern Research Group, have written to the chancellor to thank him for the expected extension of the business rates holiday in the budget while urging him to use the business rates review to reduce rates nationally and ensure there is a level playing field between bricks and mortar and online retail."
The Northern Research Group recently met a group of large and small retailers to discuss pressures on high streets and town centres, and to hear the case for a rebalancing of retail taxation between bricks-and-mortar and online retail, to better reflect changing patterns of consumer behaviour which have been accelerated during the pandemic.
Former Northern Powerhouse Minister Jake Berry, chair of the Northern Research Group, said: "The business rates holiday on retail, leisure and hospitality premises, announced by the Chancellor early in the pandemic, has undoubtedly saved hundreds of retail businesses and thousands of jobs. But in the longer term, fundamental reform of business rates is required.
“We have to level the playing field between bricks and mortar and online retail, recognising that online retailers currently face a lower proportion of rates per sale than physical shops.
“We need to make sure that once people can go shopping again, they have high streets to go back to. Physical shops are fundamental both for the economic future of our towns and cities, but also to create the strong social fabric which will help bind our communities together. They offer an experience that online shopping – valuable as it is – cannot match."
Mr Sunak is expected to announce a series of tax measures on Wednesday.
