The Chambers have been lobbying for a review of the business rates systems for many years so Danny Alexander’s announcement that there will be a “radical” review of the business rates system in England with its findings due in time for the Budget in 2016, is very welcome.
The review ‘paves the way for changes’ to the current system, which has been in place since 1988.However, the outcome is expected to be fiscally neutral, meaning that the total sum collected from businesses will not change.
The review was first announced in December’s Autumn Statement.
The Treasury said the review will look at how firms use property, what the UK could learn from other countries and how the system could be modernised to better reflect changes in property values.
The current arrangement means that companies with similar turnovers can pay dramatically different sums for business rates because their properties have varying “rateable values” depending on the size and location of their premises.
John Longworth, director general of the British Chambers of Commerce, welcomed the review, but said “actions speak louder than words”.
“Unless a root and branch reform of business rates is delivered at Budget 2016, firms will regard this as a missed opportunity to tackle a huge brake on investment and growth,”
The rates paid by English businesses are the highest of any European Union country and can be a company’s biggest expense after wages and rent.
Rates have been blamed for the decline of many High Streets and the rising number of vacant shops.
Business rates are calculated according to the rental value of the property a company uses. They date back to the Poor Law established in 1601.
Current valuations are still based on property prices in 2008, before the economic downturn hit the value of commercial real estate, as the government postponed a revaluation scheduled for last year.
