Rachel Reeves, chairman of the Parliamentary business select committee, sees business rates reform as the tool to heal hurting small businesses.

Speaking at an event this afternoon organised by the Federation of Small Businesses, Reeves said the Government’s priority has been cutting corporation tax for corporates, while ignoring small businesses.

Reeves said: “Small businesses are the backbone of the economy. They’re where future profits, employment come from. Labour in government would do all it can to support small businesses so you can grow to create prosperity throughout the country.”

The Labour MP said that the burden of business rates was felt very keenly by small business.

“I would like to see the priority of business taxation to help smaller businesses and start-up businesses, rather than cutting corporation tax, which benefits larger businesses,” Reeves said.

“We hear time and time again of the challenges of business rates. Business rates reform need to be looked at in the round, rather than just benefiting large businesses,” the Labour MP said.

FSB policy head Martin McTeague added that a first step should be stop linking business rates to inflation, which would easily be within Government’s remit.

McTeague said: “Business rates are a broken system, past its sell-by date. The best first step would be to stop indexing business rates, they can start eroding the impact. It’s a pretty modest first step but it’s something that Government could do.”

Reeves also had strong words about Amazon and other multinationals avoiding paying taxes – something which independent high-street competitors are both unwilling and unable to do.

Reeves said: “I would like to see HMRC go after big corporations and move smaller businesses to the back of the queue. There’s an issue about a level playing field. If you’re HMRC, it’s easier to go after a sole trader who hasn’t got the resources compared to someone who has big legal teams.

“People want thriving town centres. People are worried about the hollowing out of their communities and that town centre begins to die. Let’s find more creative at a local government level using business rates.”

Supreme Court decision

Speaking on the afternoon that the Supreme Court declared Government’s proroguing of Parliament to be illegal, Reeves called the decision “fantastic news”, adding that MPs could get back to work tomorrow asking MPs difficult questions about business, such as this week’s collapse of Thomas Cook.

McTeague added that the Supreme Court decision meant that Parliament would now be able to spend more time scrutinising whatever Brexit deal comes back to the House of Commons.

Reeves and McTeague agreed that government procurement also needs reform, with more contracts going to small businesses. The Labour MP said government should only procure from companies that are signatories to the Prompt Payment Code, and that if services are going to be outsourced to the private sector, then private firms should sign up to a set of commitments, including paying subcontractors on time.

Reeves said: “The cost of doing business with government is that you have to sign up to higher set of rules and criteria. Government should be procuring more from smaller businesses.

“They should be using that procurement power to better support those smaller businesses grow, rather than those big multinationals getting the contracts.”

Further reading

Labour small business minister: ‘Boris just says whatever pops into his head’