Business Rates reform: what’s left on the table?
The Government is quietly preparing to water down its reform on the business rates system, according to the Daily Telegraph today.
Cast your minds back to November last year and the signs were already there when the Chancellor pushed back the review until the Budget next month. Some saw this as a positive sign of more in-depth analysis, but mutterings from within the business rates lobby now think the intentions were not quite so honourable.
British retailers wanted to see more frequent revaluations of property, while the Confederation of British Industry wants the annual change of the rate in the pound to be moved in line with the consumer price index (CPI), rather than the retail price index (RPI).
If the Government agreed to switched to CPI, it could save UK businesses up to £1.5bn a year. Great news for the business community but it is hardly what you would call “fiscally neutral”, a term the Government has been using at every step of the BR review process. Properties are usually revalued every five years with the next Revaluation due in 2017. More frequent revaluations would mean closer alignment of rateable values to the changing economy, however, this would lead to an increased workload for the VOA which conducts the reviews and the Government is said to be less than enamored with this proposal.
The steel industry, which was hoping to have exemptions applied to certain rateable plant and machinery, could also be disappointed. This exemption could cost the Exchequer around £2bn; money the Treasury will be loathed to give up, particularly with Osbourne missing his fiscal targets again this month.
So what is left on the table for the Government? My suspicion is that they think the move to devolve business rates to the Local Authorities will neatly knock the need for any other proposals on the head. After all, it’s not going to be their problem in the future and they could claim they need to let the 2017 rating list bed in before they introduce any sweeping changes that could hamper LAs’ ability to manage their own future BR finances.
All eyes will be on the Budget next month, but a radical business rates overhaul? Nah don’t think so.
This case centres on a substantial three-storey office block: Mexford House, North Shore in Blackpool.
Pressure is still increasing on the Government to take action on business rates after the latest national town centre vacancy rate reached 10.2% last month.
The Rating Surveyors Association has published its response to the Government’s current inquiry on how business rates policy has impacted business with some interesting recommendations.