Tories pledge to scrap business rates for shops and pubs

The Conservatives will abolish business rates for high street shops and pubs if they win the next general election, the shadow chancellor has promised.

Sir Mel Stride made the commitment as he addressed the Conservative Party conference on Monday, saying the “burden of Labour’s tax rises” had been “simply too much to bear” for many businesses.

Pledging to “get business rates down”, he said: “I can announce that as a direct result of getting public spending under control, a future Conservative government will completely abolish business rates for shops and pubs on our high street.”

He added: “End of. Finished. Gone.”

The policy is expected to cost £4 billion, with the Conservatives arguing it would help protect jobs, particularly for young people, at 250,000 retail, hospitality and leisure businesses across the country.

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'Radical'

Councils will be “fully compensated” and the move would be paid for by central government, a spokesman for the shadow chancellor said.

Setting out what he called a “radical plan to rebuild our economy”, he pledged that the Tories would “always be there” for businesses.

Earlier in his speech, Sir Mel had set out plans to cut £47 billion from public spending by restricting welfare payments, shrinking the Civil Service, and slashing aid spending.

The proposals would see people with “less severe” mental health problems offered treatment rather than benefits, with Sir Mel saying this would help them to “a better life”.

He also said a future Conservative government would make savings by restricting benefits to UK citizens, although during media interviews on Monday morning he admitted that EU nationals with settled status would also be eligible for welfare.

The policy would apply to those with indefinite leave to remain or limited leave to remain and the savings calculated by the party take into account that those with EU settled status would not be affected, it is understood.

Earlier, he had told the BBC that foreign workers who were no longer eligible for benefits would have to go home or “work longer”.

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Cuts

But, apart from plans to scrap business rates and offer a £5,000 national insurance rebate for people getting their first full-time job – expected to cost £2.8 billion – he played down the prospect of further swingeing tax cuts.

Some £9 billion of the savings pledged have been allocated to cover those two measures and the previously announced policies of reversing Labour’s changes to agricultural and business property relief, costed at around half a billion, as well as VAT on private school fees expected to cost £1.7 billion.

Arguing that rising national debt meant he could not “simply say we will use all of those savings to spend more elsewhere, or to cut taxes”, he promised to only cut taxes “when it is affordable”.

He added: “Because we know where the alternative path leads.

“We saw that with a mini budget in 2022, so let me be clear: the Conservative Party will never, ever make fiscal commitments without spelling out exactly how they will be paid for.”

As well as cutting welfare, Sir Mel said a future Tory government would reduce the Civil Service back to its 2016 size and cut aid spending to 0.1% of national income.

The pledge to cut aid spending has prompted an outcry from development organisations, with Romilly Greenhill, chief executive of aid coalition Bond, saying it would be “an epic act of self-harm”.

Speaking to the PA news agency, Sir Mel said the party would look at “all areas of government” to make savings.

But he insisted the Conservatives remained “firmly committed” to the pensions triple lock, following comments from the Institute for Economic Affairs think tank arguing that rising age-related costs was the “elephant in the room” when it came to public spending.

Asked if the spending cuts proposed on Monday were necessary to pay for the triple lock, Sir Mel told PA: “You have to make savings in order to get the debt down, in order to get taxes down, and in order to fund spending in other areas, and everything has to add up in a fiscally responsible manner.”

Boost

The £47 billion of cuts also includes £3.9 billion from cutting social housing under a policy to limit access to it for non-UK nationals as well as around £7 billion from cuts to aid.

Rain Newton-Smith, chief executive of the CBI, said cuts to business rates could give high streets a boost but that more fundamental reform was needed.

She said: “Going further by shifting from a slab to a slice-based system would make a huge difference to increasing investment for businesses of all sizes and sectors, while also simplifying the system and removing the need for additional reliefs altogether.”

She also noted that plans to scrap the Climate Change Act would cause concern among businesses.

“Business will however be concerned by reactionary proposals to scrap key pieces of legislation, like the Climate Change Act, that have done much to boost confidence and underpin investment in high growth sectors.”

Shevaun Haviland, director general of the British Chambers of Commerce, said businesses would want to see reforms go further.

“The BCC has long argued for fundamental reform of business rates to create a system that is fair and affordable. While reviving our high streets is important, any changes to the rates system must go further and benefit businesses of all sizes,” she said.

A Labour spokesperson said Sir Mel had failed to explain how he would fund the savings plan.

“The Conservatives claimed they would state how they’d pay for their policies, yet made a multibillion-pound pledge to abolish business rates without saying how they’d fund it.

“It’s the same old Tories with the same old policies.

“They didn’t work then and you can’t trust them now.”

Meanwhile, in a series of speeches, shadow frontbenchers pledged to cut energy bills by £165 by abolishing the carbon tax and wind farm subsidies; restrict access to the Motability scheme for disabled people; and end an apparent “cycle-first ideology” in transport policy.