The rating system and retailing seem to be on something of a collision path at the moment, with no one really liking what is going on. The whole issue is generating a lot of noise, but little positive outcome and it seems difficult to see how things are going to improve in the short term.
Business rates are a tax paid on a property by business calculated using the rateable value of a business property multiplied by a poundage set nationally, less any relief. They are thus a reflection on the estimated value of the property and do not relate directly to current performance. The annual increase is set to match inflation based on the previous September’s RPI.
That short description of the process also lays out implicitly some of the issues that are concerning people currently. These include:
- The gap between performance and payment
- The valuation of a property (last done in 2010 on 2008 base line) and now postponed to 2017 (was due in 2015)
- The setting of rateable values
- The reliefs available to different businesses
- The rate of the annual increases given the economic recession.
Retailers are obviously one of the main sectors impacted by rates (and also small retailers are one of the main beneficiaries of one of the reliefs) and they are massively concerned with what is going on. The annual rate of increase is seen by some to be way too high on any affordability test currently given the pressures on retailers and the high levels of failure. Putting off revaluation until 2017 also means that the relative performance of places and thus their valuation is fossilised to a great extent. For town centre retailers this is a big issue. The reduction of empty premise rates relief is another factor that some seem to think could adversely affect the re(use) of property, whilst others think it is a good thing. In Wales consultation is being undertaken about the issue of rates relief for charity shops and whether this is always a benefit to places. Consultation about extension of relief for social enterprises is also underway. The Scottish Government is also opening consultation on the best options it might have.
So we really have a system that no-one seems to like, is backward rather than present or forward oriented, does not encourage innovation or economic (or social for that matter) development in the many empty or other spaces we have and which is mired in political arguments at all levels (not least the Scottish Government’s commitment to match England on this issue, but also between national and local government levels).
Perhaps we have lost sight of what we want to happen to our places and maybe the current consultations might look rather more broadly at this rather than technical tweaking of the odd thing or relief? If we want places to grow and proper, or simply to have our vacant buildings occupied with useful and creative activities then perhaps we need to design a system to do this and not simply to funnel money from one part to another. But how you do that is another thing – and if you have the answers we desperately need them.