The urgent need for business rate change in the South-West has been highlighted by the Confederation of Businesses (CBI) and Avison Young Inaction would mean more than £6bn added to business bills over the next five years, they claim.

The current Business Rates system is out-of-date, unsustainable, and in urgent need of reform, they say and argue that the pandemic has fast-forwarded that need for change because many businesses – retailers, manufacturers and distributors – are under serious strain.

In a new joint report, “Over-rated – Making the case for business rates reform”, the CBI and Avison Young reveal that the burden of business rates in England – at nearly 50p in the pound – will continue to climb without reform. New analysis reveals it would cost businesses at least an extra £6 billion over the next five years.

The CBI’s South West Director, Deborah Fraser, warned that, left unchecked business rates would continue to rise, sinking many investment plans, hitting bottom lines and inadvertently growing inequality between England’s richest and poorest areas.”

They pointed out that Business Rates are, and should remain, an important source of revenue in England, for central and local authorities, but the Government had recognised the need for reform by launching a fundamental review and the subsequent call for evidence which rightly identifies the key issues. As a first step, the CBI and Avison Young set out a package of 12 critical measures, which would save business £21.8 billion over five years.

  • For the remainder of the 2017 revaluation period (up to 2022/23), the government should freeze the Uniform Business Rate (UBR) at its current 49.9p and therefore not continue to index it in line with CPI. This is estimated to cost around £0.8 billion.
  • At future revaluations, the government should reduce the business rates burden by fixing the UBR at a much lower and sustainable rate to realign it with growth in rental values. At a minimum, the government should offset the cost of delaying the switch from RPI to CPI, equating to a reduction in the UBR from 49.9p to 44p, an estimated saving of £17.7 billion. 44p is still well above the original rate of 35p when the tax was introduced in the 1990s and higher than many other countries.
  • The government should delay the next valuation date until 1st October 2021, shortening the valuation period to 18 months, to ensure bills reflect the economic situation of the day and the property market in a post-Covid-19 world. Subsequent revaluations should consider reducing this period to 12 months.
  • Reliefs should continue to be targeted to support the most vulnerable businesses, but reform would ensure they also continue to serve their intended purpose. That can be achieved in part by removing transitional arrangements for properties whose rateable values decrease but maintaining that support for those whose rates will increase. It is estimated that would cost the government up to £2bn.