Magazine article Public Finance

Business Rates Reform Will Boost Local Economies

Magazine article Public Finance

Business Rates Reform Will Boost Local Economies

Article excerpt

Regardless of who becomes prime minister after May 7, the message to small business is clear - business rates will soon be reformed. Chancellor George Osborne's announcement in the Budget of a 'radical' investigation into reform of the business rate system delivered news that businesses have been demanding for a long time.

During her recent visit to the Camden Collective business support initiative in north London, shadow work and pensions secretary Rachel Reeves also announced Labour's intention to freeze and cut business rates, indicating a broad consensus on the need for reform.

Britain has 1.8 million businesses that pay rates, and they pay the highest business rates of any European Union country. The system dates back to the 1601 Poor Law, with rates calculated on the basis of property rental value, rather than turnover. This system fails entirely to consider modern developments. For example, online retailers, who may enjoy a substantial turnover but only need minimal office space, pay relatively low levies in comparison to businesses based in large premises.

A review is therefore desperately needed to reinstate a level playing field between small and large companies, giving firms a fair chance to grow and develop without the hindrance of disproportionate business rates.

Business leaders, local enterprise partnerships and business improvement districts need to take a position of leadership on the matter. I have commented before that the municipal landscape of London is morphing; subregional bodies and their private sector partners have the resources and flexibility to react to the needs of local areas, and make changes according to specific and unique circumstances. …

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