Clark offers sliver of hope for retailers over business rate support

As I predicted last week following The Labour Party conference, The Conservatives have also waded in with comments on business rates.

The subject hasn’t made it on to the main stage yet but struggling high street retailers may be cheered a little by comments given by business secretary Greg Clark at a fringe event.

Clark is reported to have told a small business gathering that adjusting business rates could be one way that the government can recognise the importance of high street. This could take place whilst a Treasury review of business rates is ongoing. Clark also noted that high streets should be given special recognition for the contribution they make to communities and “business rates will be one way of doing that,” he said.

He also acknowledged “… the high street is undergoing a tough time. We know that, and we know some of the reasons for it,” which most interpreted to mean the increase in online shopping, particularly among fashion retailers.
He didn’t give any further indication of proposed changes, so details are not so much scant as non-existent.

Nonetheless, it didn’t stop the media and retailers seizing on this sliver of a soundbite to keep their hopes alive.
Outside of the conference season, campaigning for business rate reform continues unabated. Last month the British Independent Retailers Association (BIRA) launched a business rates manifesto in Parliament, which called for changes to ease pressure on small retailers.

It wants the current £12,000 threshold changing to an allowance to help small businesses. BIRA believes that an allowance would simplify the relief system and negate the need for a Small Business Rates Relief scheme.
Alan Hawkins, BIRA chief executive, said: “Whilst the government offered some help to smaller businesses in the last revaluation, by doubling the Small Business Rates Relief threshold from £6,000 to £12,000, (and tapered relief up to £15,000) this doesn’t help the majority of retailers, who on average have a rateable value of £34,000.

“We propose a simple allowance, ahead of a full review of the system, using the same principles of the personal allowance applied to income tax, and through this we believe the majority of those businesses struggling with their tax would see a reduction in their rates. All those below the allowance (which could be for example £12,000) would be out of the system completely, cutting down the resource needed to process these.”

He added: “Bricks and mortar retailers are already at a disadvantage and being asked to compete on an unlevel playing field. Many retail businesses saw an increase in their rates bill last year, whilst the average bill for Amazon fell by 1.3%.”

This seems a sensible suggestion but like so many other proposals it is hardly tax neutral (one of the key tests for any business rate reform insisted by the Chancellor). And, if it was introduced as a temporary fix whilst the larger reforms are still worked out, we all know how hard it is to take any allowance away once businesses have built it into their spread sheets.