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Business rates most damaging to retailers, says CBI

The outdated business rates system is most damaging to retailers and reform could save firms £1.5m, according to the Confederation of British Industry.

The organisation has added to calls for an overhaul of the “decades-old model”, which it says is limiting investment and hampering competitiveness in businesses.

Among several key recommendations, the industry body has suggested properties valued below £12,000 should be exempt from paying rates, removing the burden from small to medium enterprises.

It has also said that valuations should take place every three years, rather than the current five, making rates responsive to changes in rent.

The CBI also believes future increases in rates should be in line with the Consumer Price Index instead of the Retail Price Index, a move that could benefit business rate-payers to the tune of £1.5bn by 2021.

“The current business rates system harms businesses by relying on a decades-old model that no longer reflects economic conditions. That’s made life tough for retailers in particular,” CBI deputy director-general Katja Hall said.

“These reforms are long overdue so it’s good that the government is following through on its commitment to look closely at how it can help alleviate the most onerous aspects of business rates.

“We want a simpler, fairer and more competitive system by having more frequent valuations, removing the smallest properties from paying rates, and using the Consumer Price Index so rates don’t outpace inflation.

“However, we must avoid devolving rate-setting powers as this will create an uneven playing field, distort growth across the UK and add extra costs for companies. Any further moves towards business rates retention must be backed up by clear evidence that it contributes to growth. As far as businesses are concerned, the case is yet to be proven.”

It comes just after the British Retail Consortium said the rates review announced by the Chancellor in last year’s autumn statement has made “a good start” but raised concerns that the next milestones between now and March 2016 are not clear.

@LukeToddUK

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