Shops in the UK’s high streets could see their taxes cut after next year as ministers launch a review of business rates ahead of this week’s budget. Danny Alexander, the Lib Dem chief secretary to the Treasury, will make the announcement on Monday, calling it the “most wide-ranging review of national business rates in a generation”.
He will say it could pave the way for changes to the way companies across England pay the tax. The review is due to report before the budget in 2016.
The rates are hated by many small businesses on the high street, which face competition from online retailers. Business lobby groups are likely to be especially cheered by the fact that the review will look at the link between rates and property values. However, John Longworth, director general of the British Chambers of Commerce (BCC), said that while the government was asking a lot of important questions, businesses know that “actions speak louder than words”.
The review, which was first announced last year, will look at the way businesses use property, what the UK can learn from other countries, and how the system can be modernised to better reflect changes in the value of property.
George Osborne, the chancellor, is also this week expected to announce plans to improve travel in the north of England, including a new Oyster-style transport card, major new investments in roads, and a new electric train line.
Osborne has insisted that his budget will not contain “giveaways or gimmicks”, but he is expected to reveal at least one policy to appeal to voters financially ahead of the election. It has already been announced that the Treasury will give millions of pensioners the right to swap their regular retirement incomes for cash lump sums. The move to end restrictions on the sale of annuities without incurring punitive tax penalties appears to be designed to woo older voters.
Speaking on the BBC’s Andrew Marr Show, the chancellor said it was patronising to suggest that older people would blow their pension pots. On the programme, he said his budget would be based around securing a “truly national recovery”, but refused to say whether it would be fiscally neutral. He is expected to raise the personal allowance from its current level of £10,500 and could potentially cut beer duty.
He added: “
People can judge me from the approach I’ve taken in this parliament, which is to tell the country the truth about the economic problems it faces, to say that Britain’s got to pay its way in the world, it’s got to earn a living. We do that by backing our businesses, growing our industry, supporting all parts of the country, making sure we’re using the talents of the entire population.
“And look, this country is in a fundamentally stronger situation than it was when I came on this show before the first budget I delivered in this parliament.”
Osborne’s spending plans set out at the autumn statement include a projection for a surplus in the next parliament that would allow for income tax cuts for middle to higher earners. However, the chancellor’s ambition to balance the books will require spending cuts that Labour has warned will require extreme austerity on a near impossible scale, a VAT rise or charging for the NHS.
Asked whether the Conservatives would stick to their goal of reaching a £23bn budget surplus in the next parliament amid speculation that he could soften his proposals for cuts, the chancellor said: “We have set out plans, and we intend to fulfil our plans.”
Osborne appeared on the programme alongside his rival Ed Balls, the shadow chancellor. The pair had an awkward encounter on a sofa, in which Balls ambushed the chancellor with suggestion that they should have a live television head-to-head debate and sealed it with a handshake.
Asked to agree to an encounter, Osborne said: “Well, I’m happy to meet you in a debate.” Balls replied: “We should shake on it and go for it.”
At that point, Osborne appeared to retreat, saying: “Ed, I’m not going to … We’re going to see who else wants to be part of that. I’ve got a very effective chief secretary who I think would also want to be part of that.”
Balls later appeared unsure whether Osborne had agreed to a debate. Speaking on BBC 5 Live’s Pienaar’s Politics, he said: “He [Osborne] started shaking hands and he was agreeing to a head-to-head debate with me. By the end of the handshake it sounded like he wanted to bring along his deputy, Danny Alexander.
“It was clear and then it was unclear. I thought George Osborne was going to do what David Cameron has ducked for weeks and weeks. He started the handshake doing it – by the end, constructive ambiguity, I think.”
Any two-way debate between Osborne and Balls would put Cameron in a sticky position as he has declined a one-to-one encounter with the Labour leader, Ed Miliband.
Responding to the business rates announcement, the shadow Treasury minister Shabana Mahmood said Labour would do more on the issue than just a “reannounced review”.
“Labour will take immediate action by cutting and then freezing business rates for 1.5m small business properties,” she said. “We will also devolve to city and county regions 100% of the additional business rates revenue generate by growth. This is part of our wider plan to devolve economic power and £30bn of funding over a parliament.
“Labour’s better plan goes much further than anything David Cameron and George Osborne are offering.”
