High cost to North West of the Business Rates postponement
Following on from my article earlier this week on how London businesses and retailers are going to be stung when the 2017 business rates revalution kicks in, it's interesting to see a new report out this week that estimates what the cost was to our region due to the postponement.
According to new research the Government's two-year deferment of the business rates revaluation has cost North West businesses hundreds of millions in much-needed capital as it slowly recovered from the 2008 economic crisis.
The review published in the Manchester Evening News calculated what the 2015 revaluation would have looked like if it had taken place when it was originally due on April 1 and compares this to what businesses will instead have to pay over the course of the deferment. Without the revaluation, the total of Rateable Values in the region would have fallen from £6.68bn to £5.27bn – a fall of 21 per cent.
The impact on North West ratepayers would have been an estimated easing of regional business rates of approximately £682m. The report also said that in the same period London businesses will actually benefit by more than £1.5bn but will be hit hard – a fact I clarified in my last article – when the deferred revaluation is implemented in 2017.
This is a very old drum which I have been banging for many years now but it has taken a General Election and promised Business Rates review to get the issue to the top of the political agenda. Current rating liabilities are valued against the backdrop of the market in April 2008, just before the onset of the economic downturn, and even now some regions have yet to return to pre-2008 levels and workable liquidity. Greater Manchester and surrounding areas have seen some level of recovery and it is great to see life return to the property market but there are still many hard hit smaller northern towns that are struggling and don't have the political profile or geographical position to be able to claw their way back quite so quickly.
There is a very unhealthy disconnect at the moment between business rates and business reality across the country and we're not going to see that remedied for another two years – and that is assuming the new tenants at No 10 and No 11 Downing Street don't come up with another bright idea to give businesses more "certainty" over their business rates. The only certainty it gave north west businesses was higher rates bills for a further two years.
London Mayor Sadiq Khan is the latest big name to call on the government to extend the business rates holiday beyond April 2021.
The retail and hospitality sectors are mobilising the troops with dire warnings that thousands of business are at risk if the rates holiday isn’t extended beyond April 2021.
The pandemic has led to more than 50,000 extra appeals being lodged against business rates by Scottish firms alone.