Chancellor Rishi Sunak has alluded that he might not give a comprehensive response to the consultation on business rates reform when he gives his Budget next Wednesday, but might “tinker with the system” – on the grounds that he has not yet had time to give the question proper consideration.
An astonishing admission! This is a chancellor who has already delayed his response to the consultation four times this year, despite the industry making clear – for years – the reforms we need to see. One wonders how much time the government needs to realise what a crisis we are in, with business rates in their current form doing much to strangle business growth and destroy the high streets in our communities.
The system in its current form is unworkable. Rates bills need to be lower, the multiplier (UBR) cut to a manageable 30p to the pound and the burden of the tax shifted away from the retail sector, which contributes nearly a third of it.
We need a reform of business rates reliefs, an extension of empty rates relief and a reform of plant and machinery orders to encourage investment, particularly if we want to encourage the green economy. We need more frequent revaluations, so that rates better reflect values, and an overhaul of the disastrous Check Challenge Appeal system.
And on the immediate front, with CPI inflation now confirmed at 3.1% , we need a rates freeze to offset the £1bn hike expected in rate bills in England next year, particularly given that more than a quarter of this will be shouldered by the beleaguered retail industry, which is already on its knees due to the pandemic.
The industry agrees on all these points. So, why is the government saying it has not had time to listen?
Obviously, there are concerns about plugging the gap between the £26bn the current system brings in and a reformed system. But we have a plethora of possibilities, such as reforming reliefs so we have no business rates deserts and everyone pays something, an online sales or delivery tax, negotiating a future digital tax on tech giants and reforming the outdated council tax.
The system cannot keep depending on milking physical retailers, as we have seen. If the government is serious about its leveling-up agenda and saving the high street, the chancellor must not kick this can down the road yet again.
John Webber is head of business rates at Colliers
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