Companies have expressed anger over the government’s response to a select committee report criticising the handling of the business rates system.
In a statement released this week, the Department for Business, Innovation & Skills (BIS) said it had published a discussion paper inviting retailers to give their views on business rates and was “considering the frequency” of rating revaluations – but it would not implement any reform until after 2017.
The government was responding to a highly critical BIS select committee report, published in March, which highlighted the burden put on retailers by the delayed revaluation of business rates until 2015. It also raised concerns about a perceived lack of strategic planning to boost retail recovery in the UK.
BIS said it recognised the importance of considering how the burden of business rates could be reduced, adding: “We want to hear from businesses, representative bodies, local authorities and ratepayers about how the system can be made simpler, more transparent and more responsive to economic circumstances.”
The comments have sparked condemnation from retailers, who wanted more immediate action.
Steve Cochrane, owner of Middlesbrough-based independent department store Psyche, said: “It’s absolutely shocking; there are now some retailers paying more in rates than they do in rent. Everybody is paying over the odds; [the Tories are] meant to be the party for business.”
British Independent Retailers Association (BIRA) deputy chief executive Michael Weedon said: “The most disappointing thing is that [the response] reiterates the fact they can’t do anything until 2017. And even then they haven’t said that they will. Lots of us have made the point that the industry can’t wait until 2017.”
Critics say the postponement will stifle recovery in the poorest areas and could lead to small businesses going bust. Had the revaluation taken place as normal last year - with the change due to have been implemented in 2015 - rates would have fallen in many regions as rental values in these areas have been dropping since 2008.
Luke Conod, managing director of young fashion independent retailer Fit in Hereford, said it was recently forced to move locations to save money because of the high rates it had been paying.
“It’s life and death for some retailers,” he added. “The government is like an immovable object. You can get a fair rent from landlords, even from the council, but rates are non-negotiable. Now they say they don’t think they should interfere in the market but that’s a load of rubbish; they already have.”
The select committee report also identified concerns about a lack of transparency over where the £2.3m allocated to the Mary Portas-led Portas Pilots was being spent. The government responded the 27 pilots had spent 54% of their grant funding as of March, with a further 29% of funding committed.
The statement said: “Many pilots are still delivering their work programmes […] the government would rather the pilots spent the money in the most effective way, than rush spending to meet an arbitrary deadline.”