What just happened

The new Prime Minister has put business rates at the heart of his first Budget on 28 October: 20 per cent relief for pubs and clubs, and a promise to “look at business rates more broadly for high street businesses“.

An uncomfortable truth first: ask on any high street who stands up for the shopkeeper, and few will say the Liberal Democrats. Yet on business rates we have carried the best answer for eight years. Labour is now campaigning on ground that has been ours for years, though the message has never reached most voters.

Why this is liberal ground

A high street is not just an economy. It is where a community sees itself: the baker who knows your order, the salon giving a teenager her first job, the pub where the ward hears its own news. It is also liberalism in practice: hundreds of people running their own lives, answerable to their customers rather than a head office, with power spread along a street instead of held by one chain or one landlord.

Labour promised to defend it too: their 2024 manifesto pledged to “replace the business rates system“. Two years on, what has arrived is a reshuffle of multipliers inside the same system.

Our position is different in kind. Conference adopted the Commercial Landowner Levy in 2018: abolish business rates, tax the land beneath commercial premises rather than the buildings on top, so that a refit no longer raises the bill, and collect it from landowners, not tenants.

Both parties have promised a fairer system; only one has designed the replacement.

What is wrong with the current proposal

I run a small high-street business in London; here it is in operator’s terms.

Start with who is helped. The pub and the club go first while the baker, the dry cleaner and the salon wait their turn. When Whitehall picks sectors, somebody is always left in the queue.

The cliff-edges are delayed, not removed: open a second site and you now keep small business rate relief on the first for three years rather than one, then it goes. A tax that penalises expansion is a growth policy in reverse.

Then who really pays. The instinct behind the higher multiplier is right: online giants pay far less than the shops they compete with. But a property tax is the wrong tool for that job. Of roughly 21,000 properties paying the higher rate, only about 1,900 are distribution warehouses; the rest include the large stores and hotels that bring the crowds smaller shops live off. And a giant with pricing power passes a surcharge on to customers and to the small sellers on its platform, as it did with the Digital Services Tax. Making the online giants pay their share is a real question, but it is about how we tax global companies, and a property surcharge will not answer it. Property tax has a different job: land, not enterprise, so nobody is punished for trading.

Here is what all this looks like from behind the counter. One salon I run has seen its rates bill nearly triple in two years, from about £2,500 to close to £7,000, not because anything about the premises changed but because a relief was withdrawn and a revaluation landed. That is not a hard-luck story; it is the system working exactly as designed.

What our strategy should be

Judge the Budget against four questions any business owner would ask:

1. Does it end the cliff-edges, or just delay them?
2. Does it stop taxing improvements?
3. Does it move the burden from occupiers to landowners, so a site pays the same whether it is trading, empty or left to rot?
4. Are bills predictable, with fixed revaluation dates and any new system phased in over years?

Our Commercial Landowner Levy passes all four. If the Budget does too, the country wins. If not, we say precisely where and why.

There is a properly Liberal point underneath. Labour keeps power in the Chancellor’s hands: discounts granted this autumn can be trimmed next autumn, and every trade must queue at Whitehall’s door, where the loudest voice wins. We give it away: fair rules set once in law, land taxed instead of enterprise, the baker treated the same as the publican. That is what dispersing power means on the shop floor.

Are we getting this right?

Partly. Daisy Cooper has led consistently on the hospitality squeeze, but read the coverage of the Prime Minister’s announcement and you will struggle to find our alternative mentioned.

There is a bigger prize than a policy argument. For millions of people the economy is what keeps a family secure today and gives their children a future. When that security slips and no one credible offers an answer, the anger looks for something else to blame, and other parties are happy to name it. Many of those voters have never heard our answer, and a growing party needs to reach them. We have a plan that works and tells a liberal story: power dispersed, enterprise rewarded, communities kept alive. It would be a waste to let this moment pass quietly.

* Pawel Urbanski is a business owner and Liberal Democrat member in Kensington & Chelsea, where he serves on the local party executive as Fundraising Officer.