Over the last few weeks, the front pages have been awash with news about the impact that changes to business rates are going to have on thousands of businesses across the UK. ACS, ALMR and FSB have long been calling for change to the rates system, and while across our collective memberships there will of course be winners and losers, many of our members are going to be hit hard in April so it is encouraging to see this issue dominate much of the media pre-Budget.
The latest development in the business rates debate came as the Communities Secretary Sajid Javid stated to Parliament that those who are most affected will get help from the Government when the Budget comes around, and there are some sectors that are particularly badly hit in April because their rates are calculated on the basis of turnover, not rental values. For example, pubs are set to see rates increases in every region of England, with an average increase in rateable value of 15 per cent, and 23 per cent for restaurants, while petrol forecourts are facing big rates increases across the board, with some sites seeing their rateable values more than double. As well as some sectors, there are particular areas or pockets of businesses where rates are to rise steeply – London, Brighton, Lincoln, Southwold and Monmouthshire to name a few. At the same time as increasing rates bills for 500,000 businesses, potential appeals are being made tougher and more expensive for the business.
The Government must acknowledge both the short term need for help for these businesses, and the long term need to act to safeguard jobs and investment. Otherwise, some businesses will inevitably become unprofitable and some may even face closure. The economic pressures of exiting the EU, the aspirations of the Industrial Strategy and the profound changes in the way we all eat, drink, shop and live, all mean that we need to see fundamental changes in the way business rates are calculated, and the part they play in government finances.
One of the biggest issues with the current rates system is the way that businesses are penalised for investment. For retailers, any investment in their stores will result in their rates bill going up because they’ve been deemed to have increased the value of their property. Similarly, in the pub trade, the subjective way in which rateable value is calculated for pubs, through the idea of “fair maintainable trade”, means that businesses are effectively penalised for any success they may have achieved. If you operate a pub or bar and you have a decent year, you can expect to be stung with considerably larger rates bill, negating any good work you may have done. Any business that has installed Solar Panels on its roof will now see a hike – so one part of Government calls for business to help tackle climate change, while another part penalises them for doing just that.
This is not just an issue for heaving bars, bustling corner shops or boutique independent retailers; it stretches much further than the High Street and affects small businesses across the sectors and across the nation – from small manufacturers to hospitality. There is a good chance that the local businesses in your community are facing April with anxiety, and will be looking for help from their local councillors, MPs and, ultimately, the Chancellor. These are community businesses that invest time and money, providing jobs and contributing to the social fabric of their local areas. The Government must act decisively to help these businesses, and to deliver comprehensive and sustainable reform so that businesses are helped to invest and grow, and all pay their fair share of tax.
We, along with other business groups have written to all MPs calling for long-term reform of rates. You can read the letter here.
If you’d like to get in touch with us to discuss these issues in more detail:
ACS: Edward Woodall, Head of Public Affairs (firstname.lastname@example.org)
ALMR: Tony Sophoclides, Director of Communications (email@example.com)
FSB: Craig Beaumont, Head of External Affairs (firstname.lastname@example.org)