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Blame game in full swing in row over rates

Terry smiling headBusiness rates is not normally the sexiest topic of conversation over the dinner table, nor does the subject often make the move to the top of the news agenda.

The recent revaluation has changed all that and seen business rates making the front pages of the newspapers as the outrage turns into campaigns threatening non-payment.

But who’s to blame for causing this current bout of indignation? Such is the fragmented nature of power across the UK that we have the bizarre situation where in England the Tory government is getting a hammering, while in Scotland the Tories are blaming the SNP administration.

“Tories face revolt over nightmare rise in rates”, reads the front page splash headline in the Daily Telegraph in England. Meanwhile, in Scotland it declares that the SNP is facing a ‘rates revolt’ with criticism coming from …er….The Tories.

Chancellor Philip Hammond is under pressure to ‘do something’ in next month’s Budget, while his colleagues in Scotland are demanding the same from Finance Secretary Derek Mackay when the Holyrood parliament reconvenes next week.

There is certainly no shortage of potential victims. The Daily Mail says Amazon will receive a rates cut while small firms face ruin and a host of vulnerable services such as children’s nurseries will be forced to raise their prices.

The Daily Express, picking up Daily Business‘s story last week that the rates hike also hits public institutions, including hospitals, claims it will cost the NHS £150m.

In a rare show of like-mindedness, Nicola Sturgeon and the Westminster government have responded by saying businesses are entitled to appeal.

However, that has also caused an angry reaction and some of the UK’s biggest employers’ groups have written a joint letter

 

Daily Telegraph (English edition)

Daily Telegraph (Scottish edition)

 

calling for a clause in UK legislation that could prevent firms appealing against unfair rate rises to be dropped.

They include the British Retail Consortium, Federation of Small Businesses and the British Property Federation.

So what’s happening?

The revaluation comes into effect on 1 April – the first for seven years. When properties were last valued almost half of businesses appealed.

It is clearly in the interests of government to reduce that number, but the UK government insists it is not preventing anyone from appealing their bills.  Both Westminster and Holyrood claim thousands more businesses will pay no rates at all.

Even so, there are repeated claims that business rates are “no longer fit for purpose” and reviews are under way both north and south of the border.

In Scotland, Ken Barclay’s review is expected to give its first take on potential changes to the business rates process in the summer. As he told Daily Business in an interview last month, there are widespread calls for change, but  “not many critics of the rates system have suggested what should replace it.”

He revealed that the “overly complex” appeals process will be a key focus of his commission’s work.

Ultimately, the commission wants to find what he describes as “a better way of implementing a rates system that will encourage economic growth, and be revenue neutral.”

Radical ideas will be considered, but a revolution or abolition is unlikely.

“At the end of the day, we will make recommendations and it is up to the government to take notice or disregard them,” he said.

Interview with Ken Barclay

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