Chancellor must go further on rates, say experts
PROPERTY experts have criticised Chancellor George Osborne for planning an ineffective change to business rates.
The Chancellor is widely expected to announce a 2% cap on a business rate increase next year, instead of being linked to the September retail prices index (RPI) measure of inflation which was 3.2%.
But campaigners say this is not enough and is not likely to make a difference to business struggling to stay afloat because of the burden of business rates.
They want the revaluation of rates to be reinstated to 2015, from 2017, which will link rates bills to current property prices. At present bills are still calculated based on 2008’s pre-recessionary values.
Richard Wackett, national head of rating at Lambert Smith Hampton (LSH), said: “Whilst the cap is anticipated to cost the Chancellor more than £300m of revenue next year, when applied to a property with a rating assessment of £50,000, it will only result in a rates bill saving of £282.60 for the year 2014/15.
“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.”
Moorfields Corporate Recovery, which is handling the administration of Blockbuster, said a 2% increase would still mean an extra £75,000 on a rates bill of £3.8m.
Partner Simon Thomas said: “If the Chancellor continues to delay the review of business rates until 2017 it will be too much for the sector to bear at the moment. Retail space is not as desirable as it once was and we need to take urgent action.
“We are not blind to the fact, however, that this would need to be paid for but are confident that by stimulating retail activity across the country the exchequer should increase the direct and indirect tax take.”
Bill Grimsey, who has conducted a review into the state of the High Street, said: “Any increase in business rates now would only exacerbate the unfairness many already feel following the postponement of this year’s business rates revaluation, which keeps rates pegged at 2008 levels near the peak of the property boom.
“While the market has seen property values and rents come down, business rates continue to defy reality and go up every year. They no longer have any real link to property values. Last year we saw the biggest increase in 20-years. There have been countless stories across our region of small businesses closing their doors for the last time because of business rates. Many now see this as an anti business tax.”
