A number of London business groups and local councils have joined forces to demand a wholesale review of business rates, arguing that the delayed revaluation set to come into force in April will cause “severe damage” to thousands of companies.
The letter calls on chancellor Philip Hammond to introduce measures to mitigate the impact of the rises in the short term through policies that help businesses generate and retain more income, such as local investment through tax increment financing (TIF) schemes.
Under TIF schemes, local authorities may borrow for infrastructure projects, against the future growth in business rate receipts which will result from the projects.
The letter has been signed by a group of London business organisations, the Mayor of London, London Councils, the Federation of Small Businesses, the London Chamber of Commerce and the London boroughs of Lambeth, Islington and Hammersmith & Fulham.
The alliance, which was co-ordinated by the New West End Company (NWEC), also includes luxury organisation Walpole, as well as London Business Improvement Districts (BIDs) that represent more than 16,000 firms throughout London.
“The long delayed revaluation of business rates, which will be implemented in April 2017, will severely damage thousands of London companies, driving many out of business,” the letter said.
“Business costs are set to rise even further through the introduction of the apprenticeship levy and the increase in the national living wage, as well as the impact of the depreciation of the pound. This all comes at a time of increasing business uncertainty as the government invokes Article 50.”
It urges the chancellor to mitigate the impact of the rises in the short term and commit to a full review in the longer-term to “ensure that we have a system that best supports economic growth and produces a high tax take in our post-Brexit economy”.
“West End stores are facing an average 80% increase in rates since the last revaluation, even though sales have only risen by 30% in the same period,” said NWEC chairman Sir Peter Rogers. “Whilst last year’s concession on transitional relief measures will offer some relief, businesses will still face significant hikes of 44% in the first year, with further increases thereafter.
“The government can no longer ignore the widespread pleas from businesses of all sizes across the nation for reform of the current system.”
The letter argues that when London’s economy thrives, the benefits are felt far beyond the capital. Likewise, when London’s economy struggles, this has a knock-on effect on employment and connected businesses in other towns and cities, as well as national tax income.
The mayor of London, Sadiq Khan, said he was “genuinely shocked” that the government’s actions will damage the prospects of many businesses in the capital and that “the very character of our local high streets is under threat”.
“This is the last thing that London businesses need and will serve as a kick in the teeth for tens of thousands of companies in the capital who are still digesting the recent vote to leave the European Union,” he said.
“Alongside the uncertainty created by Brexit, this will serve as a double whammy for business in London.”