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Government’s business rates reform failure slammed

Rates Expert Condemns Government Inaction As New Bills Come Into Effect

As new business rates bills come into effect on April 1 st , a leading expert and campaigner for change has condemned the “appalling inaction and spectacular lack of ambition” behind the Government’s failure to enact genuine reform.

The inequities and unfairness inherent in the business rates system have been known for some time, and of particular prominence following recent campaigning by industry bodies, ratepayers and sympathetic MPs. But despite a number of reviews and innumerable opportunities to embrace real change, ratepayers face at least five more years of unjust bills.

The Government claimed [1] it wanted to create a business rates system that “works better in the 21 st century”, and would seek to find ways to make the system “simpler, more transparent and more responsive to economic circumstances”. By any analysis, it has failed to deliver any of these aims:

  • Fit for the 21 st Century – Government has failed to address the inequalities caused by the rise of internet retail, and the unfair burden placed on high street retailers.
  • Simpler – Government has failed to simplify the system and a huge level of complexity remains: few businesses actually understand the system and a new appeals process is creating yet more confusion. Rates bills, containing a plethora of reliefs and supplements, as well as new discounts announced at last minute in the Budget, have become almost unintelligible.
  • More transparent – Government has failed to make rates more transparent – VOA still refuses to share evidence with ratepayers and won’t justify its valuations. This is leading to more appeals, which the Government is making more burdensome and onerous to undertake.
  • More responsive – Government has failed abysmally, promising in March 2016 that it would revalue more frequently but then immediately issuing a negative discussion paper with no intention to do anything until 2022 at the earliest.

Jerry Schurder, head of business rates at property consultancy Gerald Eve, said: “It is only now, with new rates bills hitting doormats, that firms can truly appreciate the cost of the Government’s failure to grasp the nettle and genuinely reform the system.

“UK Plc has spent the past seven years calling for reform, and the Government has had myriad chances to do so, but its consummate failure to do anything other than apply sticking plaster solutions for small businesses has hit most ratepayers hard, and will continue to do so for at least the next five years.

“Review after review has been undertaken, with firms responding consistently about the need for genuine change, but each time the Government’s response has been at best muted and at worst dismissive. It has become impossible to view the Government’s inaction throughout this time as anything other than cynical ploys designed to give the impression of action while actually kicking the issue into the long grass.

“Its flagship policy to devolve business rates to local authorities by 2020, itself criticised this week by the National Audit Office [2] , provides Government’s only response to businesses’ complaints, which is to make this a local government problem and deflect all future criticisms away from Whitehall. This Government should be ashamed of its abject failure to deliver the reforms it promised.”

1 Foreword to Administration of Business Rates Discussion Paper, HM Treasury / DCLG, April 2014 [link]

2 Planning for 100% local retention of business rates, National Audit Office, March 2017 [link]