Business Rates, Too Little, Too Late?

Danny Alexander, the Chief Secretary to the Treasury, has announced today at an event in Cambridge, a Treasury review of Business Rates to report before the Budget in 2016. The review will ask 15 questions and according to the Government “paves the way for changes” to the current system.

The review will come as no surprise to those who watched George Osborne deliver his 2014 Autumn Statement in December in the House of Commons. Or those who watched the 2013 Autumn Statement where Business Rates were capped and the indications were that a review was on its way. People with long memories will also remember the 2007 Sir Michael Lyon’s review into Local Government which made recommendations on Business Rates, and the numerous other reviews or policy statements that have gone before it.

Jerry Schurder, Head of Business Rates at Gerald Eve, was quick off the block to respond to the latest announcement. He said:

“Given this review was first announced more than three months ago in the Chancellor’s Autumn Statement, hard-pressed firms are well within their rights to ask the Treasury what has taken it so long, especially since all the Government is doing is asking more questions rather than offering solutions?

The timing of this announcement appears to be little more than a cynical attempt to appear to be tackling a vital issue in the run-up to the election, without having to do anything at all to actually address a tax that is crippling businesses throughout the country. The Government is hell bent on protecting the revenue generated by business rates and is again kicking the critical issues into the long grass, showing no real desire for systemic reform.

The questions posed by this review are essentially just parroting back the fundamental concerns raised by businesses since the last revaluation, and in many cases show no obvious differences to the earlier review of business rates administration, the full response to which we are all still waiting for. If, like the other business rates reviews this one is also to be fiscally neutral, what I would like to know is how this one offers any new hope to ratepayers?”

This sentiment is shared by a number of BCA members. For years, the BCA, along with the likes of Gerald Eve, The British Property Federation (BPF), The British Council of Shopping Centres (BCSC) and other groups have urged Governments of all stripes to fundamentally reform Business Rates, but we have yet to see the words backed up by action.

The basing of a property tax on outdated valuations is simply unjust and inefficient, when the technology exists to achieve more frequent valuations than the current 5-yearly cycle. It hampers growth, and an inequitable Business Rates system threatens to strangle the growth of small and medium sized enterprises (SMEs), the very enterprises that drive the UK economy forward.

The impact of three lost months since the initial announcement of review by the Chancellor in the Autumn Statement, combined with the intervening election which could see a new Government take power, leaves our members and their customers in a state of flux on Business Rates again. We have another year’s worth of review, and little prospect of action.

When launching the review, the Chief Secretary said, “now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective”. Everyone agrees with the Chief Secretary, but the time for words has passed. The UK cannot afford to waste more time talking about Business Rates reform. We need action now to unleash the growth of UK SMEs and throw off the shackles of this out of date and inefficient tax.

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