Chancellor misses rates opportunity

London

The Chancellor failed to mention the need to address business rates in his Spending Review this week, described as a missed opportunity by Colliers.

According to John Webber, head of Business Rates at Colliers International, this was “desperately disappointing”. 

Webber said: “The Chancellor said this Review was all about “Jobs, Jobs, Jobs”, but has forecast that, despite the measures he has revealed, the UK will see 2.6 million unemployed by Q2 next year. It is incomprehensible how he can say that on one hand, but then ignore the cries of crucial sectors of our economy, particularly the retail and leisure/ hospitality sectors, who need clarity over whether they will facing massive business rates rises again in April next year, once their Covid-19 business rates “holiday” comes to an end.

“It’s also worrying that the Chancellor has not mentioned a timeline for when he will announce on the Rates issue. Although the statement was not a tax review, it is inconceivable if he feels he can wait until the March Budget to discuss changes to the business rates system. By then many retailers will have made their plans for the forthcoming year and many of these will include closures and job losses in anticipation of the big bills coming through the letterbox.

“We are also disappointed there was no mention of any form of business rates reform- despite promises that we would hear about that this Autumn. “

Business rates contribute £26bn net to the economy, but the system, in its normal form, has been largely criticised as outdated and unfairly geared against the retail sector, putting bricks and mortar retailers at a disadvantage to purely on-line rivals or to other sectors. Criticisms were strong even before the impact of Covid-19 had taken its toll.

The business rates team at Colliers said the Chancellor should have:

 

  • Announced an extension of the current 2020/2021 100% business rates holiday for the retail and hospitality sectors  which is due to end next March- for another six or even twelve months from April 2021; giving the sector time to recover from the impact of the Covid-19 pandemic. “It is indeed inconceivable that retailers will be able to take back their high business rates commitments in April, particularly as they have missed their normal lucrative November trading period.” Says Webber.

 

  • Provided business rates relief for other sectors who have not had the advantages of the business rates holiday. This includes the office sector where many businesses were prohibited from using their offices during Lockdown and workers were told to work from home. The financial implications have been dramatic. Colliers appealed to the Government to introduce a business rates holiday for the period of Lockdown and to introduce some reliefs for the disruption to businesses seen since. As we get through a second period of lockdown, this is more important than ever, and it is disappointing this has not been addressed.

 

  • Extended the deadline dates for applications for the lockdown grants- so that businesses can take advantage of the forthcoming relaxation of current State Aid limits. At current limitation levels, only the smallest businesses can benefit from grants. Yet these larger employers are the ones responsible for maintaining most jobs.

 

  • Made good on the promise to bring in proper business rates reform. The current system is outdated, and the Government had said it would report back on the first tranche of its consultation on reform this Autumn. However, as we move into December, nothing has been said. Colliers has urged the government to bring about an immediate reduction in the multiplier to £0.30, from current levels of £0.51 - making business rates a more affordable tax across the board- so all rate payers can benefit. There should also be an immediate reform of the reliefs system also.

 

  • Brought in a business rates arrears moratorium until April 2021 at least for those businesses, who because of the pandemic have been unable to pay their business rates bills, allowing businesses a chance to sort out their finances. Many hard-pressed businesses are now receiving enforcement orders from their billing authorities for failure to pay their rates bills.  We have been urging the government to instruct Local Billing Authorities to show flexibility and support to business rather than stepping up the heavy-handed court summons.

 

Webber said “The Chancellor had a golden opportunity today to bring some relief to businesses across the country who are struggling as a result of the unprecedented circumstances we have seen in 2020. It has been disappointing that he did not mention business rates or reassure businesses that they will not be faced with either untenable bills next Spring or court action now.

“We urge him to make some announcements in the month ahead, particularly before we go into the New Year. This issue is not going away and we expect the cry from businesses to become to  “Rates, Rates, Rates.

“Failure to clarify the position until March 2021 may well lead to even more business closures and job losses across the country than the high numbers already forecast.”