Ask the panel: Business rates – what next for the business community?
Despite not securing a majority the Conservatives look set to remain in power, propped up by the Democratic Unionist Party. One Tory manifesto pledge was to conduct a structural review of business rates. With many firms having already contributed to similar consultations over the last few years, we ask the experts:
Q: Does the pledge go far enough? What would you like to see the party do for the business community now?
commercial director, Vincents Solicitors
The Conservatives’ failure to secure a majority will mean the government’s focus is now firmly on Brexit.
It seems the long-awaited full business rates review, along with the 100% business rates retention legislation, plans to provide small business rates relief and relief for public houses are unlikely to be progressed for the time being.
Perhaps we might expect some support to be introduced for businesses adversely affected by our exit from the EU, in particular those on the high street. There should be cross party support for this.
Meanwhile, it’s hoped the region’s local authorities will establish viable schemes to push out funds from the promised £300 million business rates relief package.
With the politics of our EU exit taking precedence over the pragmatic needs of business for a while, we must hope there are incidental benefits to business from Brexit, such as changes to regulation which reduce the cost of doing business.
Perhaps the chancellor’s hints of more focus on infrastructure, and the fact that HS2 stage two was referred to in the speech, are indicators the North West may start to have some of its chronic infrastructure problems addressed.
director, Phillip J Davies Holdings
The current system is flawed when a large out of town national retailer pays significantly less in rates than a small high street retailer.
Rather than tie rates to the property, a fairer system would be based on the value of the business occupying the space.
The government needs to also reform empty rates as this is preventing redevelopment of properties in secondary areas and is an unfair tax on property owners.
Pledges from the government to conduct reviews are all well and good, but what the business community needs is affirmative action and for the party to listen to our recommendations.
managing director, Bridging Finance Solutions
When details first emerged of the review it had a pro-northern bias. The smallest enterprises are exempt and provinces, including the North West, will gain some benefit but new rateable values could impose harsh rises on mid-sized London and South East businesses.
Further to the election, Philip Hammond may amend plans but he’s unlikely to back down from his defence that the review is ‘revenue neutral’, redistributive in a good way and adverse only for businesses in prosperous areas.
He needs to consider that business rates are a charge for local services, not a tax, and no business will be content to pay more for deteriorating infrastructure and policing.
A smarter calculation of ‘revenue neutrality’ would take account of profits generated, jobs created and benefits unclaimed in thriving towns and high streets. On that basis, the Treasury would be better off if there were no rises in business rates.
In my view reducing corporation tax will promote investment, job creation and, hence, an overall net benefit in Treasury coffers.
With the internet providing geographically unconstrained pricing for goods, businesses in more prosperous areas may need more help than those in poorer areas as they typically carry higher overheads.
Therefore the redistributive aspects could be destructive on an aggregate national basis.
head of rating, Colliers International
The manifesto reads as though the Conservatives have had little to do with the business rates system over the previous seven years. If they carry out reform to the extent that they set out then all well and good, but forgive those of us in the industry who see little evidence that they either understand or are inclined to make changes to make the system easier to administer or more transparent.
The revaluations should be carried out more regularly with the ideal being three-yearly with a potential move to annual. This has now been mentioned but again makes the decision in 2012 to postpone the 2015 revaluation look even more ridiculous. The government has said it will report on a consultation paper which had a deadline of July 2016 later this year. That paper covered both the frequency and type of valuation basis with options including a formula basis or what appears to be their preferred basis of self-assessment.
What the government needs to do is follow Colliers’ manifesto which includes more frequent revaluations, three-yearly, at least, by 2022. More urgent is to immediately make the new Check Challenge Appeal (CCA) process fit for purpose before the whole system implodes.