Cake shop owners lash out at Chancellor's right-hand man over tax and minimum wage hikes

The treats on sale may be delicate and sweet – but one of Rachel Reeves’ henchmen faced a bitter backlash from the owners of a patisserie in Darlington when he tried to justify Labour’s huge tax increases.

Jane and Frederic Robineau told Treasury Minister James Murray that small business people were ‘crying around their kitchen tables’ trying to cope with extra taxes and increases to the minimum wage.

Murray, one of the Chancellor’s deputies, had arrived hoping to plug the Government’s plan to make business rates ‘fairer’.

The visit took place on Thursday at Robineau Cafe and Patisserie in the County Durham town where the Treasury has a Northern branch. It was on the day Keir Starmer unveiled a blueprint for Government, called the Plan For Change.

But any hopes that Murray would have an easy ride in a PR stunt were kyboshed by Jane Robineau, who said: ‘As soon as Labour came in, our sales started slumping.

‘In January, there will be an avalanche of small businesses closing their doors, making people redundant’.

‘You are going to have less VAT, less corporation tax and instead pay out more in unemployment benefit to families, mums and dads who aren’t able to work any more.’

No cake walk: Frederic and Jane Robineau say they must pay an extra £26,000 a year in staff costs alone, before the business rate rise is added

Murray tried to defend the Government, saying: ‘The reason we took tough decisions in the first Budget was to wipe the slate clean from what we inherited.’

Jane Robineau interrupted him, saying: ‘Please, please stop.’ The couple told him they could not afford ‘fancy accountants’, nor move their headquarters to low-tax countries such as the Irish Republic to cut bills.

From April next year, Employer National Insurance contributions must be paid when staff earn more than £5,000 a year instead of the previous £9,100.

At the same time the minimum wage is rising by 6.7 per cent, nearly three times the rate of inflation, and business rate relief is being cut.

The patisserie currently has full business rate relief so will have to pay more from April.

French-born Frederic Robineau explained how the business, which has 14 staff including the couple, faces a £26,000-a-year bill from the rises in National Insurance and national minimum wage alone.

‘To pay for that, we would have to sell an extra 25,000 eclairs’, he said. ‘The obvious thing to do is to increase prices, but we’ve already increased our prices by 5 per cent at the beginning of the year and by 5 per cent in September.

‘Our costs have gone through the roof. There’s only so much our customers are prepared to pay.’

He added the business already had much higher bills, after a 200 per cent rise in electricity and 117 per cent rise in the wholesale price of chocolate.

‘You say you’ve taken tough decisions. We feel you’ve outsourced the tough decisions to us,’ he told Murray. ‘To us, it’s a big lump sum.’

Frederic Robineau, 49, has run a patisserie business with his wife for 22 years, and the cafe for 12 years.

Speaking after the half-hour discussion with the Minister, the Robineaus – who have recently launched a delivery service to boost sales – were unconvinced their message would hit home in Whitehall.

Jane Robineau, 52, said: ‘That’s a typical politician. They need to consider the reality of what they are doing. We have our feet on the ground but they need to really listen. They could have come and sat down and talked to businesses first before they made these decisions.’

Her husband felt Murray’s answers were ‘all very scripted’, adding: ‘You would think Labour especially would do everything to encourage employment rather than what they’ve done. It’s baffling. Hopefully we’ve put our point across so he remembers his visit here.’

Government pledges ‘fairer’ system

A ‘fairer’ long-term system of business rates will see warehouses run by online giants such as Amazon pay more, with bills cut for bricks-and-mortar retailers, the Government has pledged.

Although traders face a greater burden over the 12 months from April, when the current business rate relief – introduced in the pandemic – is cut to 40 per cent from 75 per cent or 100 per cent, Murray said the plan was to help the High Street over coming years.

‘We are going to introduce a permanent tax cut for retailers, hospitality and leisure businesses on the High Street, for properties of rateable value below £500,000. Those businesses make up the backbone of our high streets,’ he said.

‘Obviously, the fiscal system means we have to set out how we do it sustainably; that’s why we are introducing a higher rate for the vast properties of £500,000 rateable value and above including distribution warehouses run by online giants.’

The Government is consulting on its Transformation of Business Rates discussion paper – which outlines the proposed changes – until March 25. See here for more details.

Business rates to cost £220bn, says watchdog

Business rates will raise a total of £220 billion over six years, making the loathed levy one of the Chancellor’s biggest money-spinners, official figures show.

The tax, which is based on the rateable value of a commercial property, is set to net the Treasury £40 billion in the 2029-30 year alone – more than the sum raised by either fuel duty or capital gains tax, according to the Office for Budget Responsibility (OBR). The watchdog also raised its estimate of how much rates will net in the rest of the decade by £2.4 billion.

The windfall comes despite business rates relief for the retail, leisure and hospitality sector being extended for another year – and as the Government unveils plans to make the system ‘fairer’.

Ministers want to ‘level the playing field’ between High Street shops and online operators such as Amazon with a ‘permanent’ cut for the sector funded by a higher levy on larger properties such as distribution depots with a rateable value of at least £500,000.

But critics such as John Webber of property consultant Colliers call the move a ‘blunt instrument’ that will punish larger bricks-and-mortar retailers as well.

‘Every big retailer has a large number of distribution centres,’ he said. ‘What they’re also doing is capturing any High Street retailer who has got a big shed.’

Under the new system Colliers calculates that more than 3,000 large retail properties face paying an extra £357 million a year from 2026 – a 10 per cent rise. About 80 per cent of Sainsbury’s store portfolio is above the £500,000 threshold, according to analysts at stockbroker Shore Capital.

In opposition, Labour promised to lower business rates, said Webber, adding: ‘But if you look at the OBR forecasts you can see it doesn’t look like there are any plans to abolish or reduce this.

‘Business rates therefore seem to be something the Government will milk until they are dry.’

The cut in business rates relief next year from 75 per cent to 40 per cent means many small businesses face more than doubled bills – on top of big rises in employers’ national insurance contributions and the minimum wage. It has raised fears some firms will go to the wall before the system is introduced in 2026-27.

Patrick Tooher and Emily Hawkins

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