Business chiefs tell chancellor: reform business rates now to avert high street crisis

Small firms and retailers urge Philip Hammond to ‘fundamentally reform’ tax, as live music venues add to concerns of potential closures

Business leaders have made a final plea to the chancellor to reduce the impact of changes to commercial rates that could double the tax bill for some firms.

The trade body for retailers, the British Retail Consortium, has written to the chancellor, Philip Hammond, saying the high street needs a “fundamental reform” of the tax, while a survey by the British Chambers of Commerce (BCC) found that business rates are the biggest concern for one in two small firms.

Britain’s live music scene could also be harmed by the changes to the business rates, according to a new report.

A census of live music in the country by the universities of Edinburgh, Newcastle and Glasgow has found that the rateable value for some music venues will rise by up to 55%. The rateable value determines the level of business rates firms will pay.

Matt Brennan, of the University of Edinburgh, said: “Venues around the country have been telling us that they already operate on thin margins, so proposed increases in rateable values of up to 55% in some cases will have a significant impact.”

The change in business rates payments from April is down to the revaluation of property in Britain. This is supposed to take place every five years but the previous revaluation was controversially delayed by the government in 2015 for two years, making the changes to payments more pronounced.

The government has accused critics of scaremongering, claiming that rates for three-quarters of businesses would either remain the same or fall. Research by the Centre for Cities has found that business rates will fall in all but two cities in England and Wales – London and Reading. London faces a tax rise of 9% compared with cuts of 25% in Blackburn, Lancashire, and 24% in Blackpool, also in Lancashire, and Newport, Wales. The changes mean that businesses in central London will contribute more than a fifth of the overall rates bill for England and Wales.

However, the BCC said there was an “urgent need” for action on business rates in the budget. As well as short-term relief for the worst-hit businesses it wants the chancellor to abandon the principle that income from the tax must stay the same each year apart from an adjustment for inflation in order for the government to offer more help to struggling firms. It also wants to make it easier to appeal against rates valuations, switch how the annual inflation increase is calculated – from RPI to the lower rate of CPI – and remove all plant and machinery from the tax.

Adam Marshall, director-general of the BCC, said: “Rising business concerns demonstrate the urgent need for action on business rates in the budget this week. The UK had the highest business property taxes in the developed world even before the recent revaluation – hammering firms with sky-high costs before they turn over a single pound. This undermines business investment, which in 2016, fell for the first time in seven years.”


Graham Ruddick

The GuardianTramp

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