The Chancellor’s Spending Review Statement today promised increased spending in the UK economy but was disappointing in the fact that it said little about business rates reform, according to John Webber, Head of Business Rates of Colliers International.
Although the Chancellor said there will be £241m next year from the new towns fund to help regenerate town centres’ high streets, there was little detail about how this would be spent.
This statement follows on from Boris Johnson’s announcement last week that the £1 billion Future High Streets Fund will expand to 50 more towns, as part of the government’s plans to reshape town centres and high streets.
However Colliers believe that the Chancellor has missed a trick by not being more specific today and that unless business rates are properly reformed, it won’t get to the heart of the problem. “Such spending in itself will not be enough to counter the impact of the 2017 business rates revaluation and introduction of downward phasing.” says John Webber, “It just simply won’t go far enough to help retailers struggling with their current rate bills.”
“It would be much better to get to the heart of the high street’s problem immediately” he continued “And to plan the funds to remove downwards transition and reduce the multiplier now.”
Webber explains that the impact of delaying the 2015 Business Rates Revaluation by two years to 2017 meant that many retail businesses are paying too high business rates. Government policy of implementing any business rates rises immediately, but phasing in any reductions over the four years of the list has also meant that many retailers have been and are still paying too high business rates on their property than they should be if rates had been allowed to reach their correct level on day one.
This is added to the fact that the multiplier, (the UBR figure against which the rateable value of the property is multiplied to give the final rates bill) is still too high at 50p in the pound and looks likely to move to nearer 60p with the next Revaluation. This 50 to 60% tax is and will continue to be unsustainable for most retailers on top of all their other costs. If it could be reduced to say 34 p in the £1 as it was in the 1990s, Webber argues, businesses could more easily meet their costs and more stores stay open.
According to some commentators, should CPI figures for September be 2.1% as predicted, the Business Rates Bill will increase even further – by over £660 million- next April when increases come into play in line with inflation. This will mean rises of £170 million predicted for the retail sector alone, a sector already struggling with current rates levels.
“If the Government is serious about saving the high street it must halt any further rises, abolish downwards transition and reduce the multiplier now. Without that many retailers in many of our towns will stay under threat, stores will be closed and jobs lost, countering much of the Government’s investment plans.”