“This week’s Queen’s Speech was disappointing in the least -particularly in terms of what was announced concerning business rates.” says John Webber, Head of Business Rates at Colliers.
That’s not to say it did not address business rates at all. Although absent from the speech itself, the government did confirm a ‘Non-Domestic Rating Bill’ will form part of the agenda during the next Parliamentary session.
The Bill, which will apply to England and Wales, commits to a move to shorten the revaluation cycle from five years to three from next years and will be accompanied by new duties on ratepayers and ‘measures to support compliance’ in what it claims is a bid to improve valuation accuracy and timeliness.
The government will also provide relief on rates for a year where increases to rateable value occur as a result of improvements made to a property. It says this move is aimed at boosting investment in properties, and a new 100% relief for low-carbon heat networks.
And the Valuation Office Agency will receive new powers to provide ratepayers with information on the calculation of their rateable value.
There will also be a ‘tightening’ of appeals against rates based on changing circumstances, with the government relying on the £1.5bn provided in the pandemic support fund to ‘future-proof business rates against further shocks.
“Reading these proposed reforms, feels like careering into a brick wall,” says John Webber. “None of these proposals are new and most were announced in last year’s Budget where they were criticised then for not being radical enough.
“Obviously a three yearly revaluation is to be welcomed, although we would prefer a move to annual valuations so that rates bills give a more accurate reflection of market values. But the new duties on rate payers will be burdensome, time consuming and costly as we have continually said since they were first announced last year.
"And the rates relief to properties where increases to rateable value occur as a result of improvements made to a property are limited to just one year- so no great radical change there. One year is a tiny time in the life of a property.”
Webber is also very concerned about the statement concerning ‘tightening’ of appeals against rates based on changing circumstances. ” He comments, “This sound ominous. Last year the government effectively denied over 400,000 rate payers the chance to appeal their business rates bills on the grounds of Material Change of Circumstance caused by the impact of Covid 19 and the subsequent lockdowns, through striking such appeals out in one fowl swoop and legislating against them. This was the biggest MCC in history and it was a disgrace that businesses were denied their right of appeal.
“The £1.5bn COVID-19 Additional Relief Fund (CARF) offered instead has been a joke- not just in terms of the inadequacy in size, but also because thousands of businesses are still waiting to receive support one year on.”
It took the Government nine months to pass the necessary legislation relating to the MCC provisions and to set out guidance to Local Authorities for their relief schemes and the scheme is still mired down by delays. Colliers latest research shows that only 33% of Local Authorities have opened their schemes to applications and “As we know from past experiences, local authorities will all have different interpretations of how to spend the money, so there will be 300 different policies – a postcode lottery for businesses hoping to receive grants.”
“It is worrying if the government thinks this fund will be the answer to future MCCs, given it has not adequately dealt with the current one.” despairs Webber.
He concludes, “Yet again the government is missing a golden opportunity to bring about proper business rates reform.”
“There has been nothing said about reducing the business rates multiplier to a manageable 30p in the pound- so that businesses are not straddled with a 50p plus tax, nothing said about reforming the myriad of reliefs that complicate the system and no reassurances to the retail sector that the government won’t bring in downwards transition following the next revaluation in 2023. If they did introduce downwards transition, as they did in the last revaluation, this would delay rate bills immediately reflecting the lower rental levels we have been seeing in the sector. This would particularly hit retail in some of the less affluent parts of the country.
“The government must make an announcement about downwards transition soon, particularly as retail businesses are making their business plans now. Without this reassurance the government’s “levelling up agenda” will be meaningless and the high street unlikely to get back on its feet.”