The business rates revolution announced by the Government is to be welcomed because it offers the possibility of a fairer system, according to Ben Truslove, a director of Redditch-based John Truslove Chartered Surveyors & Valuers.
But, examining the advantages and disadvantages of the Government’s devolution proposals, he questioned whether that fairer system would emerge in practice or it would prove a mixed picture across the country?
“The jury is out,” cautioned Mr Truslove.
Uniform business rates arrived in 1990 following widespread complaints that rogue councils were using business and commerce as a cash cow. Chancellor George Osborne says this will not be allowed to happen again, but concerns remain.
The core of his policy is new powers devolved from Whitehall to local areas to promote growth and prosperity. By the end of this Parliament, local government will be able to retain 100 per cent of local taxes – including all £26 billion of revenue from business rates – to spend on local government services. The uniform business rate will be abolished.
Local authorities will be able to cut business rates as much as they like. Directly elected mayors – once they have support of local business leaders through a majority vote of the business members of the Local Enterprise Partnership – will be able to add a premium to business rates to pay for new infrastructure. This power will be limited by a cap, likely to be set at 2p on the rate.
At the same time, the core grant from Whitehall will be phased out leaving some questioning whether the overall benefit will be good or bad.
Mr Truslove said: “The uniform business rate had been irking business for some time because of the failure of revaluations to keep up. It had led to record numbers of appeals and had failed to address the many empty shops across the nation’s High Streets.
“However, it had the advantage of at least offering a level playing field.
“It can be argued that the new system will simply redistribute a relatively fixed amount of rating income in an entirely arbitrary way. A far more useful action, say some, too late now, would have been to update rateable values, originally set for this year but postponed to 2017.
“The two main worries are these – will local authorities be able to set unreasonable rate poundages which harm business … or will that indeed be blocked and will there still be some redistribution of rates revenues from councils with many high street businesses and high property values, especially in London and the South-east, to councils without the tax base to pay for the current level of services provided?
“Local to us, with Redditch and Bromsgrove, both of which have a significant number of strong businesses, I am confident that their efficiency, goodwill and understanding of the issues would mean the avoidance of such problems. But that may not be the case elsewhere.”
He added: “Overall, industry has given the Osborne blueprint a cautious welcome.
“In principle, it is certainly fairer that money comes back to the community where it was raised. But as always the devil will be in the detail.”