Business leaders joined forces at a meeting last week to call for “total reform” of the “broken” and “unfit for purpose” UK business rates system.
The Guardian-hosted fringe meeting brought together representatives from some of Britain’s biggest manufacturing firms, leading retailers and business organisations – all of whom condemned the current business rates system.
Business rates are paid by businesses all over the country based on the rateable value of the properties they own. The tax brings in roughly £25bn for the Treasury every year, but businesses claim that it has grown out of kilter with economic realities and is hindering investment.
George Osborne has committed to a review of the tax by 2017, but many businesses are concerned that this will only change the administrative process behind the tax.
Mike Cherry, national policy chair for the Federation of Small Businesses, began the attack on business rates at the Liberal Democrat conference. He said: “We have a system which is no longer fit for purpose. It needs total reform.
“It is subjective and it is based purely on property. It takes no ability of a business’ ability to pay,” he added. “In our view it is holding back growth and it is stymying further employment.”
Other delegates commented on how rates were uncompetitive and could be off-putting to international businesses, as well as the impact on a business’s profit.
Danielle Wilder, commercial director of UK cosmetics retailer Crabtree & Evelyn, said: “It makes retailing in this country in key towns and cities really difficult to become profitable.” She claimed that business rates were so high in some places that many retailers had been forced off of the high street and were made to concentrate their efforts solely online.
This attack on business rates follows an open letter from more than 100 of Britain’s biggest companies, including Tesco, Marks & Spencer and General Motors, that called for business rates to be overhauled. It said that business rates are “no longer fit for purpose for the 21st century” and must be revamped in order to “unleash investment”.
Also mentioned at the meeting was that the Lib Dems are in favour of scrapping business rates and replacing the system with land value tax in the hope that it would make the system simpler, easier to collect and fairer. But many businesses fear that this too could become complex and expensive in practice