Last month, we learned that council leaders are looking for an overhaul of the business rates system to help family firms and independent traders, amid fears that more high street shops could be forced out of business at a time when almost one in seven high street stores sits empty.

Peter Chapman

This is the latest attempt to take the pressure off struggling small businesses. Town hall chiefs say that retailers, conducting most of their trade on the high street rather than online, are unfairly penalised by the current tax system.

The Local Government Association (LGA) has requested English councils be given full freedom to set business rates to reflect their local areas, rather than the current system whereby every business pays rates based on the rateable value and a uniform business rate (UBR) set annually by central government.

Under the plans, business rate charges would be cut for the kind of retailers residents want in their high streets and new businesses could be supported with start-up leases, with the extra revenue collected being retained by town halls to spend the money effectively in their communities.

I applaud the LGA’s call for councils to retain a much greater proportion of business rates income but let’s hope this doesn’t mean a return to locally set rates.
Some of us remember only too well the ludicrous anomalies that arose pre-1990 when local authorities had carte blanche to set rates. The time when business rates in the West Midlands ended up being four times higher than those in Westminster and other London boroughs springs to mind.

While I am all for a fairer system, in the current format there is only one pot of money, no matter who has control of it. If rate-payers are struggling and a local authority needs to find the money to provide additional relief, it may need to raise an additional tax over and above the UBR. This could mirror the precept that the City of London levies on occupiers in the Square Mile to cover extra policing and security, or it could be via a BID.

In any event, haven’t occupiers got too used to having the budgetary certainty of centrally set and administered business rates? I’m not convinced there would be widespread acceptance of a return to the locally set rates of the 1980s.

Peter Chapman is head of rating and compensation at Cluttons