Business rates reform critical for Midlands to level up - CBI
An immediate and comprehensive reform of the UK’s "outdated and uncompetitive" business rates system is essential if the West Midlands is to achieve its ambitions for recovery, says the Confederation of British Industry.
The CBI is today renewing its calls for a substantial systemic revamp to make business rates fairer and more responsive to changing economic trends.
CBI Midlands director Rick Blackmore says industry will have a major role to play in the post-pandemic recovery, as well as possessing the potential to spearhead a transformation towards a more prosperous and sustainable economy.
But he said it is up to the Government to pave the way by creating a business-friendly environment which enables companies to thrive – empowering them to drive the country towards its goals for a post-pandemic recovery, regional economic growth and climate change.
The CBI believes the Government’s first step should be long overdue action to redesign an outdated rates system which too often proves a barrier to business success.
Mr Blackmore said: “The business rates system in England is unfair, uncompetitive and unproductive. It undermines the confidence of businesses looking to invest, hampering prospects and restricting progress.
“Under this archaic rates system, businesses in the Midlands can stagnate, or even falter."
He added that even before the pandemic, the region's retailers were facing a real battle against online rivals, and too many familiar names – from department stores to small independents – had been lost from our high streets.
"One in seven shops now stands empty, and the impact stretches further, too; from factories to airports to offices, to any business with a physical footprint," he said.
“With substantial ground to make up to complete our economic recovery, and big ambitions ahead on levelling up and climate action, we need business to be buoyant, confident and investing. That means giving them a platform to succeed – and that must begin with significant rates reform."
The CBI is also concerned that long gaps in rates valuations currently means tax bills can fail to respond to local economic fluctuations. That can reduce investment in the communities that need it most, punishing businesses in areas that are struggling, while also holding back those making gains.
Its recommendations for rates modernisation include; freezing rates until the next revaluation in 2023, enabling firms to instantly benefit from any falls in property valuations until then; reducing the business rates multiplier to a lower and more sustainable rate, and ending the fiscal neutrality rule which sees the multiplier increase when property values fall; moving to annual revaluations by 2026 and introducing green incentives which reward firms for investing in carbon-reducing technology and property upgrades.
Mr Blackmore added: “While the Government seriously stepped up in its support for business at the height of the crisis – including relief on business rate taxes – more long-lasting reform is long overdue.
“While business rates are – and should remain – an integral part of our tax system, businesses need change, and they need it now.
“CBI proposals for reform can help make our outdated business rates system into a tax that is fit for the future. A system that unleashes the transformative power of business investment to help, rather than hinder, our shared ambitions to save our high streets, cut our carbon emissions, level up the country and make the Midlands economy far more competitive in the years ahead."
