Wednesday, March 5, 2014

News: Business rates system deemed not fit for purpose


Hard-pressed retailers of Rotherham are effectively subsidising the high-end names of Bond Street. That's the view of one property expert on the Government's current system of business rates that has been deemed not fit for purpose by a committee of MPs.

The Business, Innovation and Skills Committee has been carrying out an inquiry focussed on Government support for the retail sector and this week published a report that concludes that the Government's retail strategies are full of good intentions but will be undermined unless the key issue of business rates is addressed.

Government support includes taking on recommendations of the Portas Review, grants in the form of Portas Pilots and new financial relief announced in the Autumn Statement. Rotherham was one of 27 areas to be named as a Portas Pilot securing £100,000 of government funding to support the high street. £268,000 was awarded to Rotherham as part of the government's High Street Renewal Award.

The current business rates system has left many small businesses paying more in rates than they do in rents and revaluation normally occurs every five years. In October 2012, the Government announced a delay of the anticipated 2015 revaluation—which would have been based on rental values in 2013—until 2017. This delay meant that the 2008 rental value of properties will continue to be used to calculate Business Rates until 2017.

The Government believes that many more businesses would benefit from the delay than would lose out but experts believe that it is hitting areas where rates should have come down since 2008 and protecting areas where rates would have increased.

The Committee calls for a wholesale review that goes beyond the administration of business rates to examine whether retail taxes should be based on sales rather than the rateable value of a property; whether retail needs its own system of business taxation; and how frequently revaluations should take place.

Jerry Schurder, head of rating at property consultants, Gerald Eve, said: "Retailers, rating experts and industry bodies have been saying for some time that the business rates system is in need of a comprehensive review and it is refreshing to see the BIS committee recognise and address many of the same issues.

"Of particular importance is the BIS committee's call for complete reform of the revaluation process with the ambition of undertaking revaluations on an annual basis. Frequent revaluations are the only way the system can accurately reflect an ever-changing economy and property market, and ensures the business rates burden is fairly spread, bringing to an end the current situation whereby the hard-pressed retailers of Rotherham effectively subsidise the high-end names of Bond Street. A move towards more frequent revaluations cannot come soon enough."

Adrian Bailey MP, Chair of the Business, Innovation and Skills Committee, said: "We are not advocating a return to a bygone age. But if High Streets are to become thriving community hubs and Start Ups are to invigorate our town centres the significant barrier to innovation currently posed by business rates must be addressed.

"The Government's retail strategies are full of warm words that fail to address the most debilitating levy on existing businesses and the most crucial deterrent to new businesses appearing on the High Street – business rates. Fewer strategies are required, simple, decisive action is needed."

Images: Acuitus


Anonymous,  March 5, 2014 at 11:06 AM  

I am a person who is interested in a business start up. I was turned down for inclusion in the new "Makers Emporium" on Rotherham`s High Street. I was not given a specific reason, but vaguely alluded to issues that had to be considered. I was offered feedback if I wished. But it was more than two weeks after the interview and so I had already moved on. I had as they say: "Got the message".
I did reply to the message and my reply was quite specific. I will not quote it here but say only this: I do not believe that the money mentioned in the article above, does not stop the project from asking for a shockingly huge rental for space. At the last minute this was no longer designated space (your own area within the shop); your items could now be displayed anywhere. In addition a commission would also be on every sale.
The risk is being taken by the hard up person trying to improve their lot, and not the project that is already funded.
Rotherham is a place that needs a stepping stone back into success. The question is: Who is paying the price?
I am a local resident, and frequent the town, and know exactly how run down it is. We need the money to filter down to help those who need it. But there is a large pavement slab of fuzzy thinking getting in the way. People are expected to pay more and more for less and less, with no certainty of the future of the town and its prosperity.

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