The plight of beleaguered shop keepers has been raised in Parliament by an MP who claims that one-in-ten retailers in her North-East constituency pay more in business rates than they do in rent.
Speaking during an adjournment debate with high street minister Brandon Lewis, South Shields’ MP, Emma Lewell-Buck, said that even big names like Marks & Spencer and Mothercare had abandoned the town when faced with a business rate rise of £1,500 in just four years. M&S had closed the doors of its King Street store after more than 80 years.
“The Government has also delayed the 2015 revaluation of business rates, which many firms have said means business owners in smaller towns are paying unfairly high levels compared to those in London and the South East,” she added. “That is not good enough, the minister must take action to cut business rates now.”
Already under fire for postponing next year’s national rate revaluation the Government has deftly passed the business rate hot potato on to Britain’s 400-plus local authorities — with each deciding if they are going to pass on money from a newly announced rate relief scheme to cash-strapped retailers.
Announced in the Chancellor’s Autumn Statement, the Retail Business Rates Relief Scheme will give all retail properties with rateable values of £50,000 or less a £1,000 discount on their next two years’ rates ending in 2016.
“Although this is a discretionary relief wholly funded by the Government, it’s hoped that all local authorities will provide the necessary relief,” explained Samantha Jones, a surveyor with Northamptonshire-based commercial agents Prop-Search. “It should also be remembered that businesses must apply for the relief for each qualifying property.”
Another facility retailers need to apply for is the option to spread their business rates across the year with 12 monthly instalments.
Under what it calls “reoccupation relief” the Government is also attempting to revive largely vacant high streets by offering a 50 per cent relief on business rates for 18 months. A property must have been empty for at least 12 months and reopened between 1 April this year and 31 March, 2016.
Jones said the Government had already hinted at plans to calculate rateable values more frequently than the current five years. “It has now published its ‘terms of reference’ for the review of business rates and said it intends to be more responsive to changes in property values and to make the system more simple and transparent for ratepayers,” she added.
The review is set to consider changes to valuation methods. It will also evaluate the frequency of revaluations to enable tax assessments to be based on up-to-date property values and take a closer look at the practice of billing and collection by local authorities, including the application of reliefs and exemptions. Many feel there is also a need to re-examine the work of the Valuation Office Agency (VOA) and the way it communicates with ratepayers and public bodies.
The British Retail Consortium (BRC) has already said that it would like to see business rates based on energy usage or the number of employees. Another suggestion is linking rates to the percentage of corporation tax paid by a retailer.
“One thing is sure,” comments Jones, “the lobbying of Government will continue until this particular hot potato is ready to be served.”
