We are facing an Economic Battle of Britain. “If Boris Johnson really wants to follow in the footsteps of our wartime leader then he needs to act now.”
Business rates experts at Colliers International have called for the Government to introduce a three-month or even six-month business rates deferment scheme to help businesses impacted by the Coronavirus.
Following last Wednesday’s Budget which was largely applauded for the support given to smaller businesses, but criticised for the lack of support to any larger businesses*, many medium and large businesses across the sector are calling for urgent action which they want and need to see now.
A three-month rates deferment scheme would mean that businesses are given a three month period in which they would not need to pay their business rates- which would eventually be paid back as times improve. This could be extended to six months if needed. Because this will be paid back, such a scheme would not be subject to restrictive State Aid rules**, as current Government relief measures are. The Government would obviously need to plug the hole caused in local authority finances during this immediate period, but this would be repaid later.
As John Webber, Head of Business Rates at Colliers International, said,
“We are in constant dialogue with our clients who are strong companies- but with footfall in retail centres ‘falling off a cliff ' and the hospitality sector seeing similar drops in trade, it is ridiculous that such large amounts of cash are being paid to the public purse when it could be used to safeguard jobs over the coming month. This three-month rate deferment would at least give businesses some breathing space to maintain their cash flow.”
He continued “Given that we could be seeing one of the worst pandemics in our life time, with a devastating resulting economic impact as shoppers keep away from stores and restaurants, warehousing for imported goods stay empty and increasingly office staff stay at home, the Government must introduce some emergency measures to support a wider section of business than it is currently proposing.”
In addition, Colliers thinks that if the impact of Coronavirus continues, businesses should also be able to claim a “Material Change of Circumstance” when appealing their business rates bills. Although these appeals would be dealt with normally over a lengthy period, the Government could and should instruct the Valuation Office Agency to make immediate temporary reductions in the Rateable Value where footfall or turnover is impacted.
“The economic turmoil we are starting to see across the global economy and indeed our own economy, means we need to prepare for the impact as COVID-19 spreads. The Government can’t just support one section of our economy. It must look at wider measures to help all businesses, or the consequences of more administrations and job losses looks certain to continue.”
"If Boris Johnson wants to reassure business and the people employed by them that he is doing everything he can, then surely the above measures should be acted upon immediately. Let's see what he says later today."
"We are facing an Economic Battle of Britain. If he really wants to follow in the footsteps of our wartime leader then he must prove it."
*Retail, leisure and pub businesses with a rateable value of less than £51,000 were granted 100% business rates relief, but there were no reliefs announced for larger players.
**There is a cap of Euro 200,000 over a three-year period on State Aid for any company in the European Union. By definition State Aid is “using taxpayer-funded resources to provide assistance to one or more organisations in a way that gives an advantage over others.” The EU is not in favour of State Aid because it “distorts competition in a way that is harmful to the “citizens of Europe””. The UK has signed up to continue these State Aid limitations even following Brexit.
