Business Rates - Agency warns Hunt he has last chance to get them right

The Chancellor has one last chance to come good on the election promise of lowering the burden of business rates – will he take it?

That’s the question posed by Colliers.

It says the Chancellor must cancel the business rates rises due next month or risk the High Street being put under even greater threat than it is already.

John Webber, Head of Business Rates at Colliers, says: “If the Chancellor does not take action to reduce this rates burden, we will see more retail chains going into administration. 

“Retail, Leisure and Hospitality Relief may have provided a temporary reprieve to the small shopkeeper or independent restaurant but gives no help to the big retail and leisure chains who are the anchor tenants in so many town centres and retail spaces and provide the opportunities for jobs.”

Webber wants Hunt to use today’s Budget to:

1. Cancel the planned business rates increase in April by reversing the decision made In November, when he increased the standard multiplier using the September rate of inflation figure of 6.7p, particularly as inflation now stands at 4.0 per cent.

Colliers has estimated that the businesses in the retail sector will pay over £360 million more in business rates, the offices sector around £400 million more and logistic/ industrial sector around £450 million more as a result of the increased multiplier.

2. Announce a plan to reduce the multiplier-Business rates are not linked to performance and property occupiers must pay them before they have earned a penny of income. Colliers says at 49.9p and 51.2p (soon to be 54.6p) for small and large businesses respectively, business rates are unacceptably high compared to the rate of 34p when they were introduced in 1990.

Renew Reliefs- Reducing the multiplier to an affordable level would preclude the need for many of the complicated reliefs most of which have been made necessary by the unaffordable level of the tax and to stave off disaster in the short term. 

These reliefs have led to business rates deserts whereby 700,000 property occupiers out of 2.1 million pay no business rates all.

3. Extend retail, hospitality and leisure relief until the next revaluation in 2026. - The Chancellor’s extension of the 75 per cent retail, hospitality and leisure relief was a welcome one and helps many beneficiaries in the short term. However, the temporary nature of the relief requires an annual review which leaves many businesses unable to plan for more than a year in the future.

4. Extend Empty Property Rates Relief to Twelve Months and to Other Sectors. The Government should accept that the significant amount of long term empty commercial property in England is due to a lack of market demand and long-term socio-economic factors, not because the landlord wants to keep premises empty.

5. Round up the cowboys - Business rates advisors are among the only providers of financial advice that do not need a license to practice. Smaller businesses in particular fall victim to cowboy rating advisors because the system is too complicated to understand without professional help. Rogue agents often take upfront payments with the promise of lowering rates bills, before disappearing with their fees.

John Webber concludes: “The Conservatives won the General Election in 2019 promising genuine reform of business rates and to cut the burden of tax by reducing business rates. 

“So far it has spectacularly failed its election pledge. Instead, we have a system that hinders businesses from expanding and deters prospective investors from overseas avoiding making new investment here in the UK because the business rates burden is so high.

“A tired Government and work from home “group think” civil servants have resulted in the burden of business rates continuing to climb – this Government is in the last chance saloon – let’s hope they do the right thing after all, even if it is 14 years too late.”