Keith Cooney, Head of Business Rates at Knight Frank has made the following comments on the Chancellor’s Autumn Statement:
“The Chancellor announced significant cuts to funding Local Authorities today and seemed to imply that this could be partially rebalanced by allowing the Authorities the right to levy an additional 2% precept on Council Tax. However, they already had a right to levy 1.99 % precept and this new percept is ring fenced to fund adult social care only.
“The Governments continuation of the policy to freeze council tax also means they haven’t been able to balance their budgets against the imposed austerity cuts. Since 2010, Council Tax in Band D has increased by just 2.2% as compared to inflation at 17%, presenting a significant unnecessary loss in real terms.
“This shortfall may be redressed in 2020 when the Authorities will be allowed to retain 100% of the Business Rates revenues. However the treasury documents state that in reality the amounts they collect will be subject to the same redistribution between authorities so they won’t have control over the £ 26 billion collected. Instead all they will have to retain is any additional rates generated over their respective thresholds since 2012.
“The Chancellor has given the Authorities the right to set their own multiplier instead of the government’s Uniform Business Rates in 2020. However, this is only to allow them to reduce the rates charged. They are prohibited from increasing the multiplier unless they go through the process of electing a city-wide mayor who will be able to add a premium under certain conditions.
“The Chancellor will also allow the police forces to increase the amount they can take from the Council tax collected by up to a maximum of an additional £12 million from April next year. There is no further detail released on how this will impact the Authorities.
“Although the announcements to extend Small Business Rates Relief to April 2017 and to increase the number of Enterprise Zones by 26 are welcome; it is difficult to see how the significant cuts to Authorities of over 54% in central grant funding by 2020 can possibly be offset by the changes announced today.”
James Roberts, Chief Economist at Knight Frank has also commented:
“For commercial property, the issue to watch is how much public sector property may now come on to the market. The tax offices and courts are less of a concern, as they will mostly be in good locations and probably will need refurbishment – so this is supply for the pipeline, not straight on to the vacancy rate. Some of the buildings may also go to other uses, like homes or hotels. The Job Centres are more of a concern given the tepid market for local retail, especially as I associate such premises as typically sitting in the wrong part of the high street.”