“Too Little, Too Late” on Business Rates

John Webber, Head of Rating, Colliers International. Copyright Nick Cunard / NCSM Media.

The Spring Budget offers “too little, too late,” according to Colliers International, the global commercial real estate agency and consultancy.

With only a fortnight to go before business rates bills will be landing on the doormats of British businesses, Colliers has slammed the Government for putting “politics before business.”

John Webber, Head of Rating, Colliers International, commenting on the Budget, said: “The Chancellor’s Budget announcement on business rates is too little, too late. It is not the ‘Budget for business’ that the Chancellor wants us to believe, all the time he proposes swingeing rates’ increases for thousands of firms. Yes, for small businesses coming out of Small Business Rate Relief (“SBBR”), this Budget will offer an olive branch, but will not delay the inevitable increases coming down the road.

“We are still awaiting the Government’s response on the last review on business rates reform. Yet another review, announced today, into business rates is a waste of time and money. It is absolutely clear that more frequent revaluations – even, three-yearly – would go a very long way to improve the current system.

“Although on the surface, a rates discount for pubs seems a positive step, it is only for “small pubs.” European State Aid rules limit the amount of discount any one company can receive from Government. For larger pub chains, which may have already received Government support, this new discount is simply a fiction.

“With around 326 local authorities in England, the Chancellor’s ‘discretionary fund’ means just £990,000 per council to offer relief to businesses over five years. This is clearly a paltry amount given the Government has caused these staggering increases itself.

“By putting politics before business when they delayed the revaluation, the Government has created this perfect storm. The chickens are now coming home to roost. I am regularly asked: ‘who are the real winners and losers?’ The real answer is that there are only losers.

“The big losers are those firms in London and the South East about to get the largest rates’ increases seen in a generation. But also losing out significantly are those businesses in depressed areas of the country who are not seeing their rates’ bills go down nearly quickly enough.”

Colliers has highlighted a software business in Sajid Javid’s own constituency of Bromsgrove. Its current business rates bill is £45,000 per year. Under these new calculations, the bill should drop to £30,000 from April. However, because the decrease has to be phased in (because of phased increases elsewhere), its actual bill will only drop to £41,000. This is £11,000 higher than it should be.

Webber continues: “And this is the crunch: the Government created this shambles. Much-needed decreases in depressed areas of the country will not be fully felt for a number of years as staggering increases in London and the South East are phased in. And at the same time, over 300,000 outstanding appeals continue to fester as firms now face these huge increases.”

Key business rates announcements in Budget 2017:
1. No business losing small business rate relief will see their bill increase next year by more than £50 a month.
2. 90% of local pubs will have a £1,000 discount on their business rates bill.
3. £300m fund for local councils to offer discretionary relief for hard-hit cases.

Colliers Manifesto for Business Rates Reform:
1. More frequent revaluations, three-yearly, at least, by 2022;
2. Increase funding for VOA in order to deal with existing appeals’ backlog;
3. Release VOA from pressure exerted by local councils and HM Treasury;
4. Introduce a register of appeals professionals  – removing the ‘cowboy’ element;
5. Iron out inequalities where small business pays a higher proportion in business rates;
6. Root and branch reform of current business rates exemptions and reliefs.