Autumn Statement falls short on business rates

Governmental inertia on business rates reform has once again reared its head – but, honestly, is anyone surprised any more? The latest offering, coming in Wednesday’s Autumn Statement, was a ”Review of the future structure of business rates to report by Budget 2016″, described in this week’s Estates Gazette as a ‘dog’s dinner’ (among other things), and, quite frankly, is starting to sound remarkably like the promise of jam tomorrow. I’ve expanded in previous posts about the disinclination of the government to carry out genuine reform on business rates, such is the security of income it provides. What’s been clear for the last couple of years is that reform has been pushed to the back of the agenda in favour of small concessions to retail operators which fit into very specific criteria. One of those concessions in last year’s Autumn Statement, and mentioned again in this year’s Budget, was the relaxation of the ‘single property’ criteria. This allowed smaller businesses to retain their rate relief for a year on their first property even if they opened a second one. It wasn’t a particularly earth-shattering policy, saving businesses around £10 million a year across the country, but it appears to have completely vanished from this year’s Autumn Statement. Is the message, therefore, that businesses can obtain rate relief – but only on the condition that they remain a one-shop operation? Would this not discourage expansion? Has the government decided that because it only saves a relatively small amount nationwide every year that it’s not worth offering? Speaking of relatively small savings, I would encourage everyone concerned to look at page 64 of the Autumn Statement, and look at  the amount saved by the four main ‘policy decisions’ on Business Rates. The small business relief extension, 2% cap on rates increase, changing the discount to £1,500 and transitional relief all amount to a saving across the UK of £765 million for the financial year 2015/16. Now look at page 100, and the projected out-turn for Business Rates in 2015/16 – 27.6 billion. Meaning these policy decisions reflect a concession of 2.77% of the overall projected rates revenue. With this in mind, I would echo Jerry Schurder’s view that the measures reflect the ‘bare minimum’ amount of help from the government in assisting struggling businesses to cope with this antiquated tax. Research from GVA this week indicated that businesses have likely paid over £10 billion in unnecessary business rates – which, next to the £765 million that is estimated to be saved as a result of this week’s announcements is an astronomical amount of money, and one which should embarrass those in power. Ultimately, though, whilst mansion tax and stamp duty are grabbing headlines and shifting the ‘PoliticalPointsometer’ on a daily basis, business rates simply aren’t seen as a vote-changing issue. That much has been obvious for years – and whilst the public grumble in the background about their high streets failing, they aren’t going to march on Whitehall demanding tax reform for businesses. That, for me, is the fundamental issue around business rates. Will this (or any) government be brave enough to potentially reduce its tax income by a considerable amount over an issue that almost certainly won’t swing an election? Or will they simply continue to tinker around the edges on commercial taxation whilst focusing more time, energy and resource on housing issues? I’ve seen very little to convince me that the next two years will see anything other than the latter.