Restaurants heap pressure on government over rates reform

Restaurants on high street

Pubs and restaurants have “welcomed” Sajid Javid’s comments on business rates and his commitment to levelling the playing field for businesses, but called on the government to follow through with its rhetoric.  

Mr Javid has promised reform for the sector as the row over business rates grows, saying that he would seek to make the system fairer.

Experts claim that huge hikes in rates, especially in London, could cripple operators financially and even put them out of business. The rate change is due to happen on April 1.

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Kate Nicholls, chief executive of the ALMR, which represents 23,000 outlets, said members want to see the introduction of sector-specific relief for pubs and bars, a capping of bills increases, and retention of a robust and fair system for appeals.

“Overtures by the minister to level the playing field are very welcome, but he must follow through with his statements and act decisively,” she said. “In particular, he must address the very specific concerns of the licensed hospitality sector that is uniquely disadvantaged by the current system.”

The ALMR has already contacted the Secretary of State to offer to meet with him to share its concerns and provide assistance.

“We have also contacted pubs located in the constituencies of prominent Cabinet Ministers to coordinate a campaign for venues and ensure that the government understands fully the magnitude of the problem and follows through on its commitments to businesses,” revealed Nicholls.

Earlier this week, the ALMR confirmed it had joined with other industry bodies to amplify its business rates campaign with a letter to Parliament highlighting flaws in the current system for licensed hospitality.

The letter targets all members of the House of Commons and underlines crucial drawbacks in the system, the ineffectiveness of previous government reforms and calls on Mmters to advocate root and branch change of an inadequate system.

The joint letter includes signatures from all aspects retail, hospitality, property and commerce, demonstrating the widespread impact that the rates increase will have.

The full letter is published below:

House of Commons
London
SW1A 0AA

Dear Members of Parliament

BUSINESS RATE REFORM

We are a collection of business organisations representing thousands of businesses of all sizes and employing millions of people across the UK. We believe that the future of the business rates system will be a key factor in shaping investment and growth in the UK economy for decades to come, meaning that how the Government addresses the detrimental impact of the existing rates system is a key question for us all.

We recognise that the 2017 business rates revaluation will result in increased bills for some and decreased bills for others, and the positive action the Government has taken with the £6.7 billion package of support that has provided welcome relief for the smallest businesses.  The burden has grown from a third of rateable value in 1990 compared to almost half today and so irrespective of the outcome of the revaluation the overall burden needs to come down for businesses large and small. There is widespread consensus in the business community that the system is unfair, outdated, and deters investment. 

We do not believe that the package of reforms delivered by the Government acted on a ‘radical’ and ‘comprehensive’ review of the business rates system. There are still fundamental issues that have not yet been addressed by the Government which should be re-explored in a revised business tax road map;

  • The burden of business rates is too high and at a tipping point

The Government is failing to deliver on its commitment to be the best country in Europe to do business. While we have one of the most competitive corporation tax rates in Europe we have the highest property taxes.  In the long-term Government should revisit business taxation with an aim to reduce the burden for businesses, and in the meantime move forward by linking the multiplier to CPI indexation before 2020 and ease the increases faced by businesses of all sizes through transitional relief. The high burden not only hampers domestic business investment, it is a barrier to new inward investment in the UK in the post Brexit Britain. Recent research conducted on international investment in UK retail, following interviews with 130 global retailers at the C-suite level, highlighted business rates as the major barrier to inward investment.

  • The proposed appeals system will deter businesses from appealing their rates

One of the most pressing issues is the proposed appeal system “Check, Challenge, Appeal”. We understand the principles of “Check, Challenge, Appeal” and agree there is a real need to avoid speculative claims that clog up the system. However, proposals that would see certain appeals dismissed if they are considered outside the bounds of “reasonable professional judgement” must be revised immediately as they threaten to undermine trust in our system and could jeopardise the future of businesses with incorrect bills.  Businesses should receive accurate rating assessments and receive a fair hearing where this has not reached their expectations.

  • There is a need to increase the frequency of revaluations to deliver more accurate rates bills

Five yearly revaluations store up problems and lead to spikes in businesses rates costs.  Moving to more frequent revaluations as the Government has committed to will deliver more accurate billing and certainty for businesses. We are willing partners to help ensure we avoid having another five or seven years pass before the next revaluation.  One solution to simplify the revaluation system would be to completely remove the smallest businesses from the rating system.

  • The rates system penalises businesses that invest and improve their properties

The rates system is acting as a brake on investment and needs to be reformed so businesses are incentivised to invest. If a business takes a risk by making property investments to improve their offer to consumers or increase productivity their business rates bills increase.  The Government needs to revisit the definition of plant and machinery and explore incentivising new business investments.

The future of business rates is a key priority for us and we want to work with the Government to deliver meaningful reform.  We want to see action from the Chancellor in the Budget to ease the burden on businesses that will see an increase in their rates bills but also a longer-term commitment from the Government to review property taxation in the UK.  We would urge you to engage with businesses in your constituency and to help them by writing to the Chancellor to reinforce the issues set out in this letter.

On behalf of

Trade Associations

James Lowman, Chief Executive
Association of Convenience Stores

Kate Nicholls, Chief Executive
Association of Licensed Multiple Retailers

Mike Spicer, Director of Research and Economics
British Chambers of Commerce

Melanie Leech
British Property Federation

Helen Dickinson, Chief Executive
British Retail Consortium

Martin McTague, National Policy Director
Federation of Small Businesses

Edward Cooke, Chief Executive
Revo

Ross Murray, President
Country Land and Business Association

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