Labour Party Plans to Overhaul UK Business Rates to Help Small Firms

(Bloomberg) -- Keir Starmer’s Labour party vowed to “level the playing field” between high street and online retailers by overhauling UK business rates — a property tax on commercial premises — if it’s voted into power at next month’s general election.

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The overhaul of the unpopular business rates system forms part of a wider package of measures geared toward helping small businesses that also includes cracking down on late payments and helping them compete for public contracts, Labour said late Friday in a statement.

The opposition party — which leads the Conservatives by more than 20 points in recent polls — has sought to claim the mantle as the party of business, that’s traditionally associated with the governing party. Starmer and his shadow chancellor, Rachel Reeves, have worked hard for months to rebuild ties with business that were damaged during the tenure of his left-wing predecessor, Jeremy Corbyn.

Labour is also attempting to balance the demands of businesses and its union backers as it prepares a set of policy promises ahead of the July 4 election. The party on Friday held a meeting to finalize its election manifesto, with a package on workers’ rights forming an important part of it.

While Labour gave little detail on how it plans to overhaul business rates, lobby groups have long called for root-and-branch reform of the tax levied on business properties. They have complained that bricks-and-mortar stores are put at a disadvantage to online competitors who are squeezed less by the tax with the Conservatives having also previously reviewed the levy.

However, it is a major money raiser for the government, generating almost £30 billion in 2023/24, almost 3% of total revenue.

The opposition party said it also wants to guarantee access to high street banking services for small firms. The package includes plans to ensure that large firms report on how quickly they pay businesses and require that at least one small-and-medium sized enterprise is shortlisted for smaller public contract awards.

“Labour has a plan to back British businesses to the hilt,” Starmer said in the statement, slamming the Tories for having “failed to provide the stability and certainty” needed by business. “We will drive down energy prices. We will unlock access to finance for business. We will stamp out late payments. And we’ll guarantee access to banks on the high street.”

--With assistance from Andrew Atkinson.

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