Retail and property experts have said changes made to business rates in the autumn Budget do not go far enough to create a fairer system.
Chancellor Philip Hammond announced that the government will bring forward the planned switch from the Retail Prices Index (RPI) to Consumer Price Index (CPI) by two years, to April 2018. This is forecasted to save businesses £2.3bn.
“Philip Hammond has yet again failed to grasp the nettle that is stinging businesses large and small up and down the country, and missed a trick in today’s Budget to introduce some serious, much-needed reform to the business rates system,” said John Webber, head of business ratings at Colliers International.
Alex Probyn, president of the UK business rates division of ratings advisory firm Altus Group, said the government “should have gone further”: “A rates liability freeze was the minimum that business needed. A switch to CPI brings a concession in tax rises of about £266m, but this is a pretty cheap giveaway by government. Even with rates rises limited next year to September’s CPI rate of 3%, this still drives revenue receipts up by £884m, with the struggling retail sector shouldering £226m of that rise.”
Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs, agreed: “Businesses would have budgeted for RPI, so switching to CPI earlier will be a bigger reduction in costs for them, which is great, but I don’t think it went far enough. A business rates reduction for the retail sector would’ve been more meaningful.”
Tony Devlin, executive director of CBRE, described the changes as “minor”: “The changes are not hugely meaningful. Businesses will feel the benefit of this sooner, as CPI will continue to be lower than RPI. That difference is only likely to increase as interest rates creep up. But there are far too many things in play for the system to change dramatically in a short space of time.”
Ed Cooke, chief executive of retail property organisation Revo, said the business rates system is still “not fit for purpose”. He added: “We encourage the chancellor to look at the business rates system in its entirety as part of the review of digital economy taxation to ensure we protect our high streets and the built environment.”
Keith Cooney, head of business rates at Knight Frank, said the early move to CPI was “welcome news”: “If this is a new dawn with the government listening to the experts once more, then hopefully they will now look at the new rating appeals system, which is not working and is causing an equal unnecessary mess.”
The chancellor also announced that future business rates revaluations will now take place every three years, instead of every five years.
This news was welcomed by Helen Dickinson, CEO of the British Retail Consortium, who said it was a “positive move to improve fairness”: “These are encouraging first steps, so now is the time to commit once and for all to putting the rates system on a more affordable and sustainable footing, to support local communities, shops and jobs. We are keen to work with government to deliver on that.”