Blow to retail as business rates reform is delayed

By

Nigel TAYLOR

Published
Oct 15, 2021

Hard-pressed fashion retailers awaiting long-overdue government plans for a major shake-up of the UK business rates system will now have to wait longer.

A call from 40 trade associations, including the Confederation of British Industry (CBI), for the business rates overhaul to be included in the 27 October Budget have been dashed.

Instead, minor changes to the system are expected to be announced with “wholesale reform” shelved until a later, as yet unknown, date.

Government plans for a major overhaul of the controversial levy have been parked indefinitely and only smaller-scale tweaks will be unveiled by chancellor Rishi Sunak later this month, sources suggested.

However, they also said Sunak is committed to reforming the system in England but has not had enough time to consider the impact of a significant shake up due to the pandemic.

It’s thought there won’t be any change announced to the valuations of properties, which is technically complex. That’s despite the ongoing chorus of retailers struggling with business rates bills that reflect the higher value of their properties some years ago.

Business rates are based on the value of a company’s physical premises, sparking criticism that the present system unfairly hits store-based retailers compared with e-tailers.

Rain Newton-Smith, the CBI’s chief economist, said: “With up to half of business investment potentially subject to business rates, it has literally become a tax on investment. If the government is serious about achieving its net-zero ambitions, kicking reforms further into the long grass cannot be the answer.”

The BRC said that without reform, swathes of bricks-and-mortar stores could close.

John Webber, head of Business Rates at property company Colliers, called the delay “massively disappointing”.

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“It is frustrating that 18 months into a consultation which has already been delayed four times in the last year, that the Government is still not ready to respond to industry calls for proper reform. Delayed action will be a further hit to businesses – it will cost jobs and will do nothing to save the high street”.
 
He added: “Obviously we will need to wait to see what is in the detail in the Budget  but we would hope “tinkering” would include a recognition that in current form business rates are too high and that the multiplier at current levels of 51p in the pound is unsustainable for business.

“The Chancellor, at the very least,  should commit to a reduction of the multiplier to around 30p when he stands up at the end of the month. That would provide a significant relief to businesses across all sectors, particularly those in retail and hospitality”.