Business rates row intensifies

“Ministers try to defuse business rates row

Philip Hammond, the chancellor, is examining ways of making the scheme fairer after widespread outrage at the first rates overhaul in seven years, which will come into effect in April.

Small businesses face huge increases while some of the biggest companies in Britain — including Amazon and large supermarkets — will benefit from rate cuts on some of their properties.

The chancellor will be looking at ways of ensuring things can be done a little fairer
Senior government sources insisted they would stick with the revaluation but conceded that more might need to be done to ease the pain.

Hammond is understood to be examining ways of preventing a “cliff edge” increase after business groups signed a letter demanding changes. But he is reluctant to pour more money into a fund to help those worst hit.

A senior government source said: “The chancellor has paid very close attention to the way this has played out over the last week. If you take money for this, it comes away from other things. The system has been fixed to ensure there are far more winners than losers.

“However, the chancellor is attuned to this and will be looking at ways of ensuring that things can be done a little fairer”. He will want to prevent “heavy-handed” implementation of the revaluation so as to ensure “the system never has a cliff edge like this ever again”.

The shift came as Grant Shapps, the former local government minister, said ministers should “quietly drop” the planned revaluation. He said he was “concerned” that the changes “may undo progress” on reviving Britain’s high streets. “Might be better not to revaluate BizRates,” he tweeted, adding that he would “need convincing transition plans will help”.

Shapps’s intervention came as the chief executive of Sainsbury’s waded into the row, calling for “fundamental reforms”. Mike Coupe described the current setup as “archaic” and called for a “level playing field”. He said: “The way it currently stands, there is an advantage for those without bricks-and-mortar operations so there’s a strong case for a level playing field in business rates and taxation generally.”

The Sunday Times has established that large supermarkets are to benefit from business rate cuts of up to 25% on their out-of-town stores while nearby struggling high streets are to be “hammered”.

Reporters analysed the top 20 towns being hit by the biggest rise in business rates, compared with the changes in rates at the local out-of-town supermarket.

Thirteen out of the 20 supermarkets were set for business rate cuts, five were having no changes and two faced higher rates.

Traders in Southwold, Suffolk, say the “rateable value” of their properties — which is used to calculate business rates — has risen by 177%. By contrast the nearest Tesco superstore — a 30-minute drive away in Lowestoft — has had its rateable value cut by 7%.

Rebecca Bishop, owner of the Two Magpies Bakery, who is facing an increase in her rates from £2,000 to £11,883, said: “The government is encouraging the growth of online retailing and out- of-town shopping and killing the high street.”

The fall in business rates for supermarkets in the 20 towns worst hit by the increases — including Cobham in Surrey, Padstow in Cornwall and Crowthorne in Berkshire — is reflected across the country.

The Valuation Office Agency is updating the rateable value of business properties on April 1 this year. The last time they were all valued was in 2010.

The rates rises have triggered a political storm with more than 500,000 traders facing increases.

The annual rates are calculated by multiplying the rateable value by a figure set by the government, which is up to 47.9p for 2017-18. There is also transitional relief to limit the sudden changes in bills.

Supermarkets are enjoying a rates cut because the rental values of their out-of-town stores has fallen.

Analysis by CVS, a business rates specialist, has found that the rateable values for 2,172 supermarkets in 2017 is £2.76bn compared with £2.93bn in 2010. The average superstore will see its rateable value fall by 5.9% or £79,368.

Sainbury’s said this weekend, however, that it expected its rates bill to rise from £483m to £500m.

CVS said it would “stick in the throat” of many small businesses trying to keep their “heads above water” while the warehouses of large online retailers such as Amazon and various superstores were getting business rates cuts.

It added that the government had said in 2015 that it would conduct a structural review of business rates but this was never delivered.

Mark Rigby, chief executive of CVS, said: “April will serve a hammer blow to small shops and the consideration should now be to ensure that they are in fact paying fair and accurate rates.”

The Department for Communities and Local Government said most businesses will either not see their rates rise, or will enjoy a fall.

It added that 520,000 ratepayers will see their bills increase, 920,000 will see them drop and 420,000 will see no change.”

Sunday Times, 19th Feb 17 (paywall)