Real estate firm Colliers International and Greater Birmingham Chambers of Commerce are calling on new Prime Minister Boris Johnson to make tackling business rates a top priority.
John Webber, head of business rates at Colliers, says Mr Johnson must take action and understand the negative impact the 2017 Revaluation process has had on UK companies.
Some companies, particularly retailers in Central London, have seen their business rates rise at unprecedented levels, while others, who should have seen their rates bills fall, suffered from the policy of transition and are still paying bills higher than they should be - or can afford.
Mr Webber said: “The move to four-yearly revaluations is all very well, as is the move to link business rates rises to CPI as opposed to RPI increase.
“But in themselves they will not solve the crisis. Nor will the decision to give business rates relief to the smaller traders do anything to help those big retail chains that are suffering.
“It’s the Debenhams, the House of Fraser, the M&S’s that are either on the CVA list or closing stores and cutting the jobs and none of them come in the under £51,000 RV+ bracket, which is where the last Chancellor has provided the most help. I just don’t understand why nobody in Government has clocked this.”
While a parliamentary select committee is currently looking at business rates and is expected to announce its findings before the Autumn Budget, Colliers and the GBCC have urged the Prime Minister to take drastic action.
They are calling on Mr Johnson to:
- Immediately freeze any further business rate increases next year. Few businesses can cope with yet another rise on top of unprecedented rises in the last few years.
- Immediately remove downward phasing of business rates payments enabling rate payers to pay their true rates liability now and not wait four years to do so.
- Review and implement a policy to reduce the multiplier from 50p to 34p in the £1. The current level is effectively an unsustainable 50 per cent tax.
- Reform the whole systems of complicated reliefs to avoid business rate deserts in some parts of the country. All businesses should pay something for the services they receive, but if the multiplier was reduced to a manageable level, it would not provoke the crisis it is at the moment.
- Look at other reliefs, such as agricultural reliefs which may need reforming, spreading the load more evenly across the UK economy.
- Reform the appeals system, providing more support to the VOA to deal with existing appeals’ backlog. It is essential that businesses have a true and fit for purpose appeal system, if they believe they have been assessed unfairly.
- Plan to Move to Annual Valuations. Annual valuations are ideal, but can only be achieved with a fully funded VOA and an appeal system that is fit for purpose.
“While Mr Johnson is understandably fixated on securing Britain’s withdrawal from the European Union, it is essential that he also concentrates on fixing the fundamentals of the domestic economy in a bid to strengthen its competitiveness.
“Introducing a freeze on rates, simplifying and making this outmoded system fairer would be a good start and to echo the sentiment projected by the incoming PM in his victory speech, the hard work needs to start now.”
John Webber added: “Business rates contribute £26 billion to the country’s coffers and is a vital source of income for local authority funding. Putting the burden of who pays it on an ever-decreasing number of companies is both fool hardy and dangerous, particularly if such bills are the last straw that breaks the camel’s back.
“The new prime minister has said he wants to support business and as Mayor of London he did call for a cut to business rates. I really hope he can navigate us through the Brexit negotiations and then turn to the choppy waters of Business Rates - before they finally overturn the ship, lifeboats and all! Let’s see if he follows through when he gets his hands on the tiller. The jury is indeed out!”