Industry gloomy over Autumn Statement

Widespread disappointment about business rates led the property and business community's reaction to George Osborne's pre-Budget report.

David Cowie, Senior Director at CBRE North West commented: "It is clear that the changes proposed by Mr Osborne won't result in a dramatic improvement to the situation faced by businesses. Our analysis [table below] shows today's cap amounts to little more than a token gesture, which will have little material impact on small businesses.

"We, like many others, were hoping for a business rates freeze, it is also disappointing that the government continue to ignore calls to reintroduce the 2015 revaluation. The retail sector and small businesses in general needs a confidence injection, instead the 2% cap is a shot that won't improve the high street's health. The government has missed a golden opportunity to help the already squeezed retailers in England and Wales.

"Current 2010 rateable values are based upon rents achieved in April 2008. In what would be a significant U-turn the government should reintroduce the 2015 revaluation. This would hardly be considered radical but would demonstrate an understanding of the difficulties being created by a system based upon historic rental levels. A revaluation would see rateable values become more representative of the local rental market. We are aware of situations where a business rates liability exceeds the rent payable. Levels of business rates are prohibiting business expansion and doing nothing for our ailing high streets, this will continue despite Mr Osborne's statement."

David Lathwood, director of English and Welsh regions at Jones Lang LaSalle, said, on the introduction of capital gains tax to foreign sellers of UK homes: "Like many populist political measures, the economic reasoning behind this decision is far from sound. Overseas capital plays a vital role in helping developers secure finance to get schemes to go ahead. Manchester in particular has emerged as a hot destination for Far East investment into UK real estate, which is in turn helping to bring forward new schemes in the city that provides housing for UK residents."

Lathwood on the business rates cap: "While this will be welcome news to many of the North West's high streets, it stops well short of what's really required – a full overhaul of an outdated system that currently values Rochdale town centre's business rates more than those of Harrods. The economy is performing well but many small retailers and struggling major chains are yet to feel the benefit. The current business rate system is a massive handicap."

Robert Hayton, national head of empty rates at Altus Edwin Hill commented: "The Government has failed to deliver a statement that makes any real impact to business. In capping the increase on business rates at 2%, the Chancellor has merely set the rate at the Government's inflationary target, which it has failed to meet. A capped increase, but still an increase where none is justified.

Adam Burke, director, rating at the North West office of Colliers International in Manchester, said: "The Autumn Statement is the Coalition's attempt to grab headlines without substance in the hope British business won't value what the cap actually means. We have been lobbying to highlight the issue of compound interest and whilst we are grateful that Osborne has capped the increase in business rate costs, the underlying problems remain; empty rate charges, the postponement of the 2015 revaluation and uncertainty for small business as to whether or not they'll receive on-going rate relief for anything longer than a 12 month window.

"The current Business Rates system involves; bandings, hurdles, caps, which in my view should stay on the race course where punters can speculate their money away. We're striving for a fair, simple system, one which British and global business can invest in and build from, not just now but in the long-run, certainly longer than any single party's term in office."

Next year another 30,000 student places will be available at universities. After next year the cap on student numbers will be abolished altogether, Osborne said.

Mark Oakes, chief operating officer of Vita Ventures, the specialist property developer behind luxury student accommodation provider Vita Student, said: "It is fantastic that the government is committed to attracting more students to the UK. It will undoubtedly help boost the economy in university cities as well as solidifying the UK's position within the global higher education hierarchy.

"With an extra 30,000 students going to university in the 2014/15 academic year and an unlimited number after that it is crucial that all the necessary infrastructure is in place to support them. This includes appropriate accommodation which is often a core factor when students are selecting their university and settling in when they are so far away from home.

"Vita Ventures is already working to meet this requirement by developing the very best accommodation in the UK which has been designed following feedback gathered in focus groups with UK and overseas students.

"We will have more than 1,100 beds available for the 2014/15 academic year across five top Russell Group university cities and we have several more developments in the pipeline which will cater for the student population as it continues to grow in the future."

Simon Rubinsohn, RICS chief economist, said: "As we've been saying for a long time, the lack of housing supply is crippling the property market. If Help to Buy is to remain, Right to Buy extended, and expensive social housing sold off then the Government's commitment to building houses simply must be extended.

"The £1bn of loans to unblock housing development across the country will contribute towards housing need and will drive construction jobs. However, we still believe housing is not at the centre of a coordinated property-led growth that supports a balanced regional recovery where all can access the market. The increase in the HRA borrowing cap will only make a very minor dent in the housing deficit.

"It was also disappointing to see long overdue changes to stamp duty have been ignored, particularly as the amount of revenue generated from this is rising sharply. The government plans to collect more than £60bn over the next five years in stamp duty receipts from British householders. Moving away from stamp duty brackets to a marginal system would be a boost to those struggling with the cost of living and help boost the number of property transactions. This will remove the so-called 'dead zone' created by the previous structure which saw a dearth of properties on the market between £250,000 and £270,000.

"Business rates are currently imposing a very heavy burden on SMEs and today's measures provide real support for business growth. The reoccupation relief will go some way to regenerate the high street at time when the latest RICS Commercial Survey shows an upturn in interest in retail space."

Adam Waller, tax partner at PwC in Manchester, said: "Some businesses have exploited the use of partnerships to avoid national insurance contributions and this needs to be tackled. At one extreme we've heard of fruit pickers trading as partners making a few pounds of profit per hour, a clear wheeze to avoid national insurance contributions and paying the minimum wage. But in some professions, such as the legal sector, there are good commercial reasons why someone has the title of partner without having a real equity stake in the business. It will be hard to work out where the dividing line is in practice between what's legitimate and disguised remuneration, and today's changes move the bar much higher than expected. For the many law firms where salaried partners are off the payroll, the tax changes could mean crippling costs. It's not uncommon for half or two thirds of a law firm's partners to be salaried and off payroll. For a mid-tier law firm the extra NIC bill could easily be over £1m, and across the sector as a whole the costs could run to many tens of millions a year."

Alistair Grant, construction director at Carlisle-based Story Contracting, said: "The best medicine for the construction industry has always been a buoyant economy and that remains the case. The economy appears to be picking up some momentum and that should mean 2014 is a better year all round.

"Some of the Chancellor's announcements today are welcome. In particular, removing the need to make National Insurance contributions for new workers aged under 21 will help constructors like us continue to create jobs for young people, the future of the sector. Meanwhile, the £1bn pledge for housing developments outside London is also a boost for regional contractors. However, as is always the case with such announcements, we will need to see the detail to assess how big an impact it will genuinely have.

"We will look forward to the Budget for more announcements to help the construction industry, but the most helpful thing the chancellor can do is help keep the wider economy on track and continue to build confidence."

Richard Wackett, national head of rating at Lambert Smith Hampton, said: "The Government has missed the opportunity to reform the outdated business rates system, which would reduce the Government's administration burden, allow them to settle appeals more efficiently and remove artificial barriers to further development and growth. The proposed measures will complicate an already complex regime and avoids addressing the more fundamental reform required by business occupiers.

"This is unlikely to make a significant difference to the viability of the business and much more radical changes to the rating system are required if they are to have any real impact on rates bills that are perceived by many to be crippling both industry and the High Street."

Jonathan Pochin, managing director of Pochin Construction, said: "Rather than committing funds to projects that may take years to become shovel-ready, the additional £1bn of loans to release stalled housing developments should have a more immediate impact on the construction industry's project pipeline.

"The investment across residential, energy, transport and water projects means that a range of skill sets will be required, so now is the time for the industry to really invest in our workforce and develop appropriate training schemes. The introduction of an extra 20,000 apprenticeships will bring young and enthusiastic employees to our sector, and we need to ensure that they are supported."

Duncan Harkness, director and head of business rates in North West for GVA, said: "GVA welcomes any government action which reduces the burden of business rates. However, a below inflationary increase to 2% across the board with continued help for small business through extended reliefs is a small step, when a more significant stride was required. In real terms rates continue to rise and the cost of £300 million represents lost revenue to the public purse, business still faces rate bill increases of 2% in next April's bills.

"GVA's recent research identified a £1 billion saving coming directly through the government's decision last year to delay the revaluation by 2 years to 2017. This saving offered the government greater leverage to do more and freeze business rates for the next two years.

"The real problem remains, the government will not make a U-turn in their decision to delay a revaluation by 2 years to 2017. This is despite clear evidence that their decision last year was poorly thought through, inequitable and has undermined the rating system as a tax base. As a consequence for a further two years rate liabilities remain based on a 2008 peak market and will continue to reflect none of the subsequent recessionary impact until 2017. Their decision has resulted in growing calls from strong lobbying groups for fundamental change to the business tax system and a shift away from a business rates. I question why fundamental reform, with all the uncertainty that then arises as to the big tax winners and losers, is necessary when a 2015 revaluation and more frequent later revaluations, to say 3 years, would put fairness back into the system.

"GVA calls upon the government to reinstate the 2015 revaluation and in the meantime look for specific ways to target relief for hard pressed areas where business bankruptcy has increased vacancy levels to all-time highs."

Simon Binns, BID manager at the Heart of Manchester, which represents 380 city centre retailers, said: "The announcement that businesses moving into vacant high-street properties will have their business rates cut by 50% is very encouraging. In terms of the city centre, you can see places like King Street really benefitting, where there is no shortage of interest but rates have been an issue."

Fred Webster, director of King Street Investments, which owns 52 King Street, welcomed the move. His unit had been vacant for more than two years before he agreed a three-month deal with Diageo, The Liquorists and Cityco on The Reserve pop-up bar and shop which opened in October.

"This is the best news town centres have received since the recession," he said. "It's great news for investors and retailers on the high street as it means an empty property has a much better chance for a permanent letting.

"At the moment I have a pop-up bar in my unit on King Street on a short term basis, and this announcement opens up new avenues for them and the property, and promises regeneration for town centres across the UK.

"There are lots of charity shops, non-charitable traders, retailers and café operators looking to take shorter term occupancy on the high street and this will give them an opportunity to see if they can realistically make a business work."