October 2013

Labour’s rates freeze is a token gesture

Ed Miliband recently engaged in his latest bit of politicking by announcing plans for a freeze on business rates
with the pretext of helping small business - if his party comes into power in 2015.

Wolf & Badger is a small business, started in 2009 with an ethos of supporting other small businesses through our retail concept set up to promote and sell emerging, independent fashion and design brands.

So surely this recent announcement from Labour should come as music to our ears and ought to provide a useful boost to our finances?

Think again. Despite being a small business supporting dozens of other small companies, we would not fall within Labour’s criteria for assistance.

Thanks to our premium high street positioning, rent and rates are our largest outgoing. Accordingly, our properties fall outside the rental valuation threshold of £50,000 required to benefit from the proposed freeze.

Any steps to help small businesses should be applauded, but on closer inspection it is not clear whether this freeze will be effective. It may save a few pounds for some small businesses - up to 1.5 million companies, according to some reports - but for many it will do nothing, while benefiting larger competitors with several small properties.

Tesco and Boots, for example, would profit from a freeze in rates on their portfolio of smaller stores. This could spell further bad news for independent retailers on the high street as they struggle to compete.

Ed Miliband has done well to draw attention to the outmoded, outdated and inefficient system of setting business rates. But his changes look likely to do little to fix the system or to deliver help where it is needed most, and may well exacerbate the problem.

A complete overhaul of business rates would be well received by Wolf & Badger, but the proposed plans seem to be little more than a token gesture.