This week Labour leader Ed Miliband pledged to freeze business rates if his party is successful at the next election. While this has been cautiously welcomed by the business and commercial property sectors, a new report highlights the adverse impact the delayed revaluation is having on the North of England and has added to calls for a complete overhaul of the system.
Rochdale Town Hall
The research, conducted by the Local Data Company in conjunction with the University of Liverpool, reveals the extent of the disparity between business rates and current rental values. It shows that, if up-to-date property values were used in the calculation, rates on a shop in Rochdale would fall by 65 per cent while a London shop would see a rise of 52 per cent.
Rochdale MP, Simon Danczuk, says the figures reveal that towns which have seen the greatest fall in rental values are being ‘clobbered’ by business rates. The government claims that it has delayed the revaluation to prevent businesses experiencing unexpected increases but, Danczuk insists, the reality is that towns like Rochdale are ‘effectively subsidising’ more prosperous areas of the country.
According to Matthew Hopkinson, of the Local Data Company, this disparity has led to “the significant acceleration of shop closures north of the Watford Gap.” This is illustrated by figures which show that one is six shops in the Northwest are vacant, compared with just one in twelve in Greater London.
Retail veteran Bill Grimsey, who has recently completed a report on the problems facing UK high streets, describes the situation as ‘inexcusable’ and says that it is making a bad situation worse.
Labour’s pledge will help small businesses in properties with a rateable value below £50,000. But Helen Dickinson of the British Retail Consortium (BRC) believes the proposal should form part of a ‘more fundamental root and branch review’ of the business rates system.
“The UK business rates are the highest property taxes of any EU country and lead directly to empty shops.
“A consensus is emerging that the system is no longer fit for purpose and requires total reform,” she said.
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