McDonnell urges help for small businesses to prevent high street 'wasteland'

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A £500 million emergency package of funding should be established to help high street shops facing a hike in business rates, shadow chancellor John McDonnell will tell company chiefs.

In a challenge to Chancellor Philip Hammond ahead of the March 8 Budget, Mr McDonnell will demand extra help for firms facing rises in their bills after the business rates revaluation.

The shadow chancellor will use a speech at the British Chambers of Commerce annual conference to warn that high streets face becoming a "wasteland" unless small firms are offered extra help.

Ministers have insisted that around three-quarters of businesses across the country will see no change to their bills, or a reduction as a result of the revaluation.

But Mr McDonnell will tell the conference in London that the average small shop will be hit by an extra £3,663 in rates over the next five years while some large retailers and online firms will see falls in their bills.

With Mr Hammond under pressure to act to help small firms, Mr McDonnell will demand an "emergency relief fund" worth at least £500 million until 2020 for small and medium-sized enterprises (SMEs), funded by reforms to the entrepreneurs relief tax break.

The shadow chancellor will attempt to shift the focus back on to Labour's policies after warning that Jeremy Corbyn was facing a "soft coup" to oust him.

In his speech, Mr McDonnell will say: "The growth of online retail is of course welcome for consumers who have benefited from increased price competition.

"However, we cannot let our high streets become a wasteland of boarded-up shop windows, due to poor government decision-making that makes the competition rigged against the small businesses on our high streets."

He will add: "We cannot go ahead in the way we are if it could mean many businesses go to the wall, and the jobs destroyed.

"Labour wants to support these businesses that are a cornerstone of our economy.

"And it's becoming clear day after day, that Labour is the only party that is truly on the side of small and medium sized business."

The revaluation, the first since 2010, was "long overdue" but had been "handled atrociously", he will say.

"It was delayed not for the best economic reasons, but for the best interests of the Tories ahead of a general election. It cannot be allowed to continue this way.

"And it also cannot be right that whilst the average small shop will be hit by an extra £3,663 in their business rates over the next five years, some large retailers and online retailers will see a substantial fall.

"The revaluation doesn't reflect how our economy has changed since the last one.

"And nor does it take account of the particular cost pressures smaller businesses are now under."

Labour's transitional relief fund would see £150 million a year made available to local authorities for three years to help firms in their areas.

A further £350 million a year would be shaved off bills by changing the way they are uprated to the CPI measure of inflation rather than the generally higher RPI index - a change Labour are calling for now but which the Government is not expected to introduce until 2020.

Taken together, Labour said those two measures would amount to £500 million a year in support for businesses.