Business rates rethink

I have written many times on this blog about the harm to SME's caused by business rates. The next re- evaluation is not set until 2017. In some places, rates can be higher than rents. The 'Fair Rates for Retail' campaign has called upon the Chancellor to freeze or (preferably) cut business rates in the upcoming budget. Business rates are, in the words of Kwasi Kwarteng MP (in an article in today's Guardian), a 'tax on the high street.' The Chancellor would do well to listen to his colleague as well as to struggling businesses on our high street. February showed that retail sales had grown by 2.7%. This is positive news. However, consumer spending is likely to remain depressed. The recent string of high street administrations shows this. Therefore, I was pleased to read this:

http://www.retail-week.com/in-business/policy/treasury-considers-business-rates-rethink-as-pressure-from-retailers-grows/5046900.article?blocktitle=Most-popular&contentID=-1

The government has signalled that it is considering a u - turn on business rates. Unlike the others, this u-turn will be deeply welcome and much needed. Ian Cheshire, CEO of Kingfisher and Chairman of the BRC (British Retail Consortium), states that that were it not for long-term leases he would close a quarter of the DIY retailer’s stores due to the tax burden. The following Retail Week article:

 http://www.retail-week.com/in-business/fair-rates-for-retail/fair-rates-for-retail-retailers-urge-rates-freeze/5041237.article

also makes clear that two years of punitive rate increases have added more than £500m to costs. The BRC Director General was right to assert that 'the most important four letter word in Westminster should be jobs.' The government already boasts that it has already created more than a million private sector jobs since taking office. Whether it has or hasn't, the fact remains that a business rates cut would increase the pace of job creation. Job creation is the strongest argument for a rates cut.

The Chancellor should listen. According to the article- the government is considering the way that increases in rates are calculated (by linking them to the lower rate of CPI rather than RPI). Business rates are bad news all around- bad for Tenants struggling to make a profit, bad for Landlords who need rent paying Tenants in their properties and bad for a government in need of tax receipts to balance the books. Will the Chancellor freeze or cut rates? Only budget day will tell. If the Chancellor wants a big headline initiative (that will actually have any effect) then he knows what he must do.