In what is being seen as the most outspoken criticism of the business rates system so far, more than 100 of the country’s biggest companies have condemned the tax as a “critical problem” to recovery and future investment.
Demanding that all the major political parties commit to reforming the current system as part of their General Election manifesto a collective of retail, manufacturing, property, hospitality and service industries firms has signed an open letter The Daily Telegraph claiming business rates are “no longer fit for purpose for the 21st century”.
The system — which generates around £25bn for the Treasury each year — has led to punitive rates that are higher than any other property tax in Europe and one of the highest within the Organisation for Economic Co-operation and Development.
Despite a promise from George Osborne of a “root and branch” review of the tax by 2017, it is generally felt this will be watered down after next year’s election to nothing more than administrative tinkering.
Co-ordinated by the British Retail Consortium (BRC), the 107 signatory firms include Asda, Sainsbury’s, Tesco, Morrisons, Marks & Spencer, Whitbread, KFC, Ladbrokes, Paperchase, Heineken, Costa, Hammerson, Co-op, TGI Friday and General Motors. The entire list ranges from FTSE 100 listed companies to owner operated SMEs.
Among the organisations adding their weight to the letter are the Federation of Small Businesses, the Recruitment & Employment Confederation, the Association of Licensed Multiple Retailers, Freight Transport Association and the British Chambers of Commerce.
Helen Dickinson, director general of the BRC, said the number and breadth of industries represented in the letter “shows the strength of our collective belief that the existing system is no longer fit for purpose … And that the political parties should make a commitment to look at deeper reform of business rates if they form the next government after the election.”
In the letter, the collective claims that: “A recent survey demonstrated that 93 per cent of MPs agree that the fundamental reform of business rates would revitalise our high streets and town centres. Manufacturers, retailers, the hospitality trade, property, service industries and businesses large and small are all held back by business rates.
“A modern, sustainable and transparent system would unleash investment that could bring skilled and entry level jobs and new and expanded businesses into our local communities,” it says. “Those who seek a competitive tax regime as a draw for investment and jobs should apply that logic to business rates.”
Jerry Schurder is head of rating at property agent Gerald Eve, whose firm signed the letter. “It is clearer than ever that businesses across the spectrum are challenging the rating system which, if left unaddressed, will continue to severely impact on enterprises of all sizes and sectors and cause harm to the UK as a place to operate from,” he said.
“A property-based tax remains the most appropriate means of raising revenue for local services but it needs significant reform to make it fit for purpose,” added the agent, while calling on the Chancellor to take immediate action.
“George Osborne must use December’s Autumn Statement to announce an expansion of the terms of reference of the ongoing review of business rates administration to encompass comprehensive reform of rates, with the aim of creating a system that genuinely supports investment and gives businesses a fair deal.”
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