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Pressure piles on Sunak to reform business rates

Rishi Sunak

Time to act: Rishi Sunak

Trade associations from across the economy have piled more pressure on the Chancellor to reform the business rates system.

They say the tax on business is outmoded and acts as a drag on the government’s goal of a high wage, high productivity and high investment economy. 

The CBI, UK Hospitality and the British Retail Consortium are among 41 business groups calling on Rishi Sunak to take action that would unleash a wave of investment in the economy. They represent 261,000 businesses and nine million employees.

Rather than cut business rates across all sectors, the key proposal is that the tax rate – the Uniform Business Rate – should be fixed, with rates payable adjusting directly in line with changes in property values. This would deliver cuts in the bills for high street shops, with increases in liabilities for big box sheds whose property values have continued to increase through the pandemic.

There is also a call for an exemption for improvements that make properties more sustainable.


Jerry Schurder, business rates policy lead at property consultants Gerald Eve, commented: “These proposals fall short of the initial asks of many of these trade organisations who were seeking a significant cut across the board, but this widely supported position statement is a pragmatic response to the challenging state of the country’s public finances.”

Business rates is devolved to the regions and nations, so Mr Sunak could only change the system in England. However, if he introduced major structural change it is almost certain that the governments in Scotland, Wales and Northern Ireland would follow with their own reforms.

Rain Newton-Smith, CBI chief economist, said reform should be included in the Budget and Spending Review on 27 October.

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“Action to get investment flowing into and around the UK is sorely needed to reinforce our recovery,” she said. “By setting out an approach which attracts investment, he can equip the UK with the tools it needs to secure the high wage, high productivity and high skill economy of the future.

“With up to half of business investment potentially subject to business rates, it has literally become a tax on investment. 

“Action to stimulate investment, starting with business rates reform, unites firms spanning the whole economy.

“If the government is serious about achieving its net zero ambitions, kicking reforms further into the long grass cannot be the answer.”

Rachel Reeves, Labour’s Shadow Chancellor, said: “The business rates system is no longer fit for purpose. It penalises high-street shops in favour of online giants and deters businesses from investing in new green technologies. 

“That’s why Labour announced that we will cut, and eventually entirely scrap, business rates, replacing them with a new system of business taxation that is fit for the 21st century.”

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