This year has been one of slowly fermenting change in the business rates world across the UK. Two Select Committees and one election have combined to set the stage in England for 2020 to be potentially significant for the much-disliked tax, and developments in other nations might also yield major changes. During this period the BRC has been at the forefront of efforts to secure much needed reform.
The BRC and its devolved equivalents have been leading the charge against business rates - we are now the go-to body for media stories on rates, a position bolstered by our constant work during the past twelve months.
In the early part of the year we worked with members to refine the BRC’s submission to the Treasury Select Committee’s inquiry into business rates. We subsequently gave evidence to the committee in May. This was backed up with joint lobbying, with other trade bodies, of the Committee to welcome its new Chair and to encourage speedy publication of the inquiry’s findings.
In August over fifty retail CEOs and trade bodies put their names to a letter to the Chancellor lobbying him for fundamental reform of rates, and in the meantime calling for four specific changes: a freeze in the multiplier; proper resourcing of the Valuation Office so that it can process appeals in a timely manner; a new ‘Improvement Relief’ to incentive investment in properties; and abolition of downwards phasing, whereby the rates bills that should be low are kept artificially high in order to subsidise staggered increases in the rates bills of others.
Happily, all the above, barring a freeze in the multiplier, were recommendations made by the Select Committee when it reported in October. Indeed, virtually all of the Committee’s recommendations were in line with the BRC’s own submission, and they provide a great platform for action in the coming year.
It certainly provided a platform for the election. For the first time in a long time (ever?) all three main party manifestos not only featured business rates but did so in the context of arguing for anything from a full review of the system to outright abolition and replacement.
The fact that this once obscure tax now features so prominently in party manifestos is a sign that the political class have heard the concerns of retailers and others about the damaging impact the tax is having on the industry. Empty shops and the high-profile closure of many high street names is no doubt focusing minds and making it easier to land our message with politicians across spectrum.
In this context the Government sought to pass one of the recommendations from the 2015 rates review – the snappily titled ‘Non-Domestic Ratings (Lists) Bill’. This short and uncontroversial Bill was the legislation mandating the next revaluation to be in 2021 rather than 2022, and for future revaluations to be three-yearly thereafter.
This improvement to the current system of five-yearly revaluations fell when Parliament was prorogued in November. It is vital that it is re-introduced as a matter of urgency. This is because the valuation date that informs ratings valuation lists occurs two years before the new list comes into force. Thus if the Bill mandating the 2021 start date doesn’t become legislation early in 2020, it will be too late for even a 2022 revaluation to take place as the necessary corollary valuation date of April 2020 will have already passed.
The above primarily relates to England, but it has been a dramatic year in other nations of the UK too. Northern Ireland has had a review of its rates system. The NIRC Director secured a meeting for members with the senior valuation and Finance Department officials heading the review as part of our engagement before submitting a full response in November.
Scotland is also making a late entry for most dramatic business rates intervention of the year with MSPs voting in December to devolve the setting of rates and reliefs to Scotland’s 32 local authorities from the Scottish Government. This potentially momentous change was an amendment to the Non-Domestic Rates (Scotland) Bill, which is seeking to implement shorter revaluation periods and make other administrative changes to the Scottish business rates system. The SRC are working hard to make sure that MSPs are aware of the huge impact that this surprise intervention would have if it survives intact in the final Act.
Lobbying on these issues will remain priorities for the BRC in 2020, alongside deepening our relationships with Ministers and officials and ensuring that our Budget submission gets traction in the Treasury. Beyond this, the core mission for us on business rates is to ensure two things: that the promised English review happens soon – we will be aiming for a start at or soon after the Budget in February; and that the scope of that review is meaningful and enables the prospect of real change, and not just short term minor alterations. We will be talking to members in the early part of 2020 to develop our position on the review and to ensure that we continue to speak to Government as the trusted and authoritative voice of retail for every nation of the UK.