‘Radical’ review of business rates system is launched

The Chief Secretary to the Treasury, Danny Alexander.

The Chief Secretary to the Treasury, Danny Alexander. - Credit: PA

A “radical” review of English business rates aimed at making the system fairer has been launched.

It will look at evening out the disparity between companies hit by the annual property tax and those based online.

The assessment will also examine improvements to the way changes in property values are dealt with by the 30-year-old system.

It follows Chancellor George Osborne’s announcement in last year’s autumn statement that the annual tax would be overhauled.

The review, launched by Chief Secretary to the Treasury Danny Alexander, will report back by next year’s Budget.

He said: “Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

“This government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.”

Most Read

New measures are due to come into force next month that will mean small business rate relief is doubled for a further year, business rates discounts for smaller retail premises are increased and the rise in the multiplier will be capped at 2%.

The English business rates system was introduced in 1990 and covers around 1.8million non-domestic properties, such as shops, offices, warehouses, factories and guest houses, a year. The tax raised £20.5billion in 2013-14.

Shabana Mahmood, shadow exchequer secretary to the Treasury, said: “Britain’s businesses need more than just a re-announced review. Labour will take immediate action by cutting and then freezing business rates for 1.5m small business properties.

“We will also devolve to city and county regions 100% of the additional business rates revenue generate by growth. This is part of our wider plan to devolve economic power and £30 billion of funding over a parliament.

“Labour’s better plan goes much further than anything David Cameron and George Osborne are offering. And unlike the Tories, we won’t short-change areas which choose not to have an elected mayor by giving them a second-class deal. Every part of England will benefit from Labour’s better plan, not just a few.”

The British Retail Consortium’s director general Helen Dickinson welcomed the move, saying the business rates system “acts as a major drag on our economy while punishing our local high street”.

She said: “To guarantee that this review is a success it’s absolutely crucial that the Government seeks authoritative and independent analysis as it progresses, with solutions based on the objective consideration of supporting evidence.

“Taking this approach will guarantee that the Government’s own assessments are robust and that the necessary sweeping reforms deliver a fairer and sustainable system, one that ensures that the tax more closely reflects the wider economic conditions and allows businesses to remain competitive.

“With cross-party political support for a fundamental review of business rates I’m confident that we can bring about badly needed change, and in doing so securing the investment, jobs and growth that have been held back by the burden of this pernicious tax.”l