Demand for urgent action to reform ‘archaic’ business rates system

An immediate and comprehensive reform of the UK’s “outdated and uncompetitive” business rates system is essential if the Yorkshire & Humber is to achieve its ambitions for recovery, decarbonisation and levelling up.

That is the view of the CBI, which is today renewing its calls for a systemic revamp to make business rates fairer and more responsive to changing economic trends.

CBI Yorkshire & Humber director, Beckie Hart, said industry will have a major role to play in the post-pandemic recovery, as well as possessing the potential to spearhead a transformation towards a more prosperous and sustainable future economy.

But she added it is up to the Government to pave the way by creating a business-friendly environment which enables companies to thrive.

She said the Government’s first step should be long overdue action to redesign an outdated rates system which too often proves a barrier to business success.

Hart added: “The business rates system in England is unfair, uncompetitive and unproductive. It undermines the confidence of businesses looking to invest, hampering prospects and restricting progress.

“Under this archaic rates system, Yorkshire & Humber businesses can stagnate, or even falter.

“Even before the pandemic, our retailers were facing a real battle against online rivals, and too many familiar names – from department stores to small independents – have been lost from our high streets.

“One in seven shops now stands empty, and the impact stretches further, too; from factories to airports to offices, to any business with a physical footprint.

“With substantial ground to make up to complete our economic recovery, and big ambitions ahead on levelling up and climate action, we need business to be buoyant, confident and investing. That means giving them a platform to succeed – and that must begin with significant rates reform.”

The CBI says long gaps in rates valuations currently means tax bills can fail to respond to local economic fluctuations.

It warns this can reduce investment in the communities that need it most, punishing businesses in areas that are struggling, while also holding back those making gains.

CBI recommendations include:

• Freezing rates until the next revaluation in 2023, enabling firms to instantly benefit from any falls in properly valuations until then.
• Reducing the business rates multiplier to a lower and more sustainable rate, and ending the fiscal neutrality rule which sees the multiplier increase when property values fall.
• Moving to annual revaluations by 2026, ensuring rates bills adjust quickly to economic changes and protecting against shock rises.
• Introducing green incentives which reward firms for investing in carbon-reducing tech and property upgrades.

Hart said: “While the Government seriously stepped up in its support for business at the height of the crisis – including relief on business rate taxes – more long-lasting reform is long overdue.

“While business rates are – and should remain – an integral part of our tax system, businesses need change, and they need it now.

“CBI proposals for reform can help make our outdated business rates system into a tax that is fit for the future.”