Hodge: 'Now’s the time to push for rate reform’

Labour MP Margaret Hodge has said that there is no better time to push for business rate reform than the present, because the government has been weakened in parliament by the general election.

The former chairman of the Public Accounts Committee also blasted the government for having a “complete lack of guts” to take the “real reform that is needed” to make the system fairer. She was speaking to The Bookseller following a parliamentary reception she hosted in the House of Commons last week on behalf of The Booksellers Association (BA), the Publishers Association and World Book Day.

During the event, BA chief executive Tim Godfray warned that 275 towns were at risk of losing their bookshops unless the issue of business rates was tackled. Altogether, a quarter of high-street bookshops are facing a hike in business rates of 10% or more, according to a survey of BA members, Godfray reported, and the hike in cost could put as many as 275 towns at risk of losing their local bookshop. “The business rates issue is something we cannot ignore,” he said. “Put simply, if something isn’t done, booksellers will be put out of business . . . The business rates system is not fit for purpose and should be fundamentally overhauled.”

To illustrate what the organisation believes is a disparity between how the current business rate system affects bricks-and-mortar shops and online businesses with warehouses, Godfray cited the example of Waterstones in Silver Street, Bedford. The shop is charged £850 per sq m in business rates, while Amazon’s Marston Gate Distribution Centre, located just down the road from the chain bookseller, pays £52.50 per sq m— 16 times less.

Speaking to The Bookseller, Hodge said: “There is a complete lack of guts on behalf of politicians to do the real reform that’s needed to have a fair property rates system, whether its businesses or homes. And that illustration of Amazon paying so much less than Waterstones, it’s just so openly unfair. The government ought to have the guts to tackle it. We need to provide a public service for the common good, but it ought to be fair.”

When asked if she had any confidence that the government would reform the system, Hodge replied: “No”. However, she added that with Conservatives operating a minority government following the general election in June, now would be a good time to push for change. “It depends on the strength of the lobby. We are in an interesting period now where there isn’t an overall majority, so I think it depends. [It’s] one of the few times in [our] democracy where if you really have an effective campaign you can bring about change. Now is a good time to build support for it.”

Business rates shot up for many retailers in April this year after new rates were implemented based on commercial properties’ 2015 rental values, replacing a rate calculated from their 2008 rental values. Hundreds of retailers have been “crippled” by the rise, according to the BA.

One such retailer is this year’s British Book Awards Children’s Bookseller of the Year, Tales on Moon Lane bookshop in Herne Hill, south London. Owner Tamara Macfarlane spoke of the impact rising business rates have had on her business in a BA video entitled “Support Bookshops and a Reading Nation”, explaining: “As we are talking, our business rates have increased from £60 a month to £300 a month, and will be going on up to £700 a month if they are not re-evaluated. This has immediately meant that we have had to cut staff hours we vitally need in order to go out and do the community work we’ve been doing.”

In February, Tim Walker, owner of Walkers Bookshops, said: “We have been selling books since 1972 and I don’t think I’ve ever seen such unprecedented rises in costs [that] I have no control over.” His two premises, in Oakham (East Midlands) and Stamford (Lincolnshire), had to tackle business rates rises of a third and 50% respectively.

Hodge notoriously grilled Amazon UK’s policy director Andrew Cecil in 2012 as part of her role as chair of the Public Accounts Committee about the level of Corporation Tax it then paid in the UK. She later called for a boycott of companies that sought to avoid paying the tax, including Starbucks, Amazon and Google. Hodge told The Bookseller she had kept to her vow of avoiding buying from the e-commerce giant. “I never buy anything from Amazon,” she said. “To this day, I have kept to my word.”

In its manifesto, the government pledged to help local authorities to control more of the money they raise. A spokesperson for the Department of Communities & Local Government said: “The government is considering the scope of possible reforms to the business rates system, including the frequency of revaluations, and will provide an update in due course.”