Business Rates giveaways – where does it end?

Business rates could be cut to save the steel industry in the UK, according to the economy minister Edwina Hart.

She promised to look at the cost of cutting business rates; the reality of whether she is legally able to do it as well as financially.

The steel industry has been all over the news in recent weeks with jobs losses and closures blamed on both high energy costs and cheap imports flooding the market from China. Hart gave her pledge to bosses and union leaders at a crisis summit in Cardiff last week, subject to a number of caveats such as EU anti-competition laws.

That’s a noble gesture and politically quite expedient but where will it end? Retailers have been having a hard time for years now but the Government developed a definite case of tinnitus when it came to hearing their pleas for clemency. Or how about Christmas trees growers? If artificial trees suddenly see a huge spike in popularity this year are we going to give them an early Christmas present with a business rates hand out in 2016 to tide them over?

The BBC says Tata Steel is losing about £1m a day in Wales – its heaviest losses since the depths of the recession. The company recently also said it planned to mothball some operations at Newport, where unions fear 250 jobs will go, and Shotton, Flintshire, where around 40 jobs could be affected.

I’m pretty sure that even a generous cut in business rates won’t make a huge dent in a £1m a day loss-making operation but, if we make an exception for one industry to save a few hundred of even a few thousand jobs I’m not sure there will be much left in the pot for Local Authorities to be fighting over once devolved powers start to kick in.

Yes, we had the banks that were too big to fail in 2008 but will the steel industry shrinking really bring the UK economy to its knees now or in the future? I don’t think so somehow. Look at what happened after the pits closed or when the northern textile industry hit a decline, workers re-group, re-train and re-deploy – that’s the free market and tinkering with business rate handouts will not stop that cycle from repeating over and over again.

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