MPs call for urgent overhaul of the business rates system

MPs have made fresh calls to completely overhaul the business rates system as they published results of their Retail Inquiry today.

The inquiry was undertaken by the Business, Innovation and Skills Select Committee and took evidence from big-name retailers including Marks & Spencer, Boots and Sainsburys. The report concludes that the existing business rates regime is “not fit for purpose”.

The chair of the committee, MP Adrian Bailey, said business rates was the “overwhelming issue” brought up by the businesses and individuals who gave evidence to the inquiry last year.

The committee called for a six-month business rates amnesty for those taking up empty properties while the Government works on a new approach.

It also recommended that the Government review whether business rates should be calculated using the 12-month CPI inflation rate rather than the September RPI ifigure. And it proposed a 2% cap on business rate increases, an initiative the Government already plans from April.

Bailey said: “If the Government wants the high street to wither and make it derelict and a social desert then it can, but if it wants to help it must tackle the taxation system and help small bricks and mortar retailers.

“At the moment they are just offloading responsibility to the local authorities through rate relief, knowing full well that they are so strapped for cash they can’t do it.”

Bailey said business rates are the “single biggest threat to the survival of retail businesses on the high street”. 

He said that a tax on online retailers should be reviewed in order to level the playing field with bricks and mortar retailers, which have more property and so pay much higher rates.

Former Wickes boss Bill Grimsey, the retail campaigner who published his own Grimsey Review on how to help high streets, said: “How many more reports like this do we need before ministers finally wake up to the problems they’re storing up by continuing with a system that’s simply not fit for purpose?

“We need decisive action and a willingness from Government to introduce urgent reform now. Everyone knows the scale of the problem but ministers are acting like rabbits frozen in the headlights.”

British Retail Consortium director general, Helen Dickinson said: “This report must be the final nail in the coffin of the question ‘do business rates need to be reformed?’ They do. Business thinks so. A committee of Parliament thinks so. We very much hope the Government will think so too.”

The BRC has been conducting its own review with EY into how the Government could move to a fairer system.

The inquiry also called for the Government to provide more information on how the Portas Pilot towns, which were allocated £2.3m by the Government to boost high streets, have spent their money. The cash was awarded as part of a review conducted by retail expert Mary Portas on behalf of the Government.

And it urges the retail sector to encourage more staff to be trained to Apprenticeship Level 3 and above, and consider developing language skills to enhance international consumers’ experience

Bailey added: “The Government must outline the action it will take to tackle any skills shortages and the sector itself must be more ambitious in the level of training it offers to its staff.”

A statement from the Department for Communities and Local Government, which is the department of the high street minister Brandon Lewis, said: “The Government’s long-term economic plan is working, delivering economic security to hardworking people. A key part of this plan is supporting business which is why we have taken a series of steps to help local firms and shops with their business rates including announcing over £1billion of business rates support at Autumn Statement 2013.”