Government rapped for not tackling rate issues

Nov 18 2009 By Andrew Mernin, The Journal

ONE of the region's most influential business organisations has criticised the Government for failing to tackle the major issues in its rate revaluation, which was announced yesterday.

According to the Government, around 50,000 businesses, or 67% of the region’s firms, will see their rates fall next year following its latest five-year calculation of rates.

Ministers yesterday said no extra money will be collected as a result of the 2010 revaluation, with a million bills being lower in 2010 than in this year.

On a national level around 60% of business properties will see falls in their rate bills next year, with business properties seeing an average decrease of £770 in 2010-11.

Meanwhile the Government is to put in place a £2bn relief scheme to limit and phase in increases.

However, Richard Elphick, regional chairman of the Institute of Directors, said the plan was not a cause for celebration.

He criticised the fact that some firms will see a reduction in their commercial property rates, but only as other businesses will be forced to pay more. He said: "One can assume that the winners will be contributing to reducing the pain to the losers. This must mean therefore that really there will be no change.

"If this is indeed the case as businesses we should not get excited but lament the fact that this announcement has cost the taxpayer goodness knows how much for nothing.

"In the meantime the Government is continuing to charge full property rates to owners of buildings that have not been able to let them and which remain empty.

"[This] is causing some desperate businesses to demolish perfectly good buildings that could be a benefit to the business community. What is meant to be a reasonable levy for local essential services has become a national tax which makes it harder still for British business to compete in a global market."

John Cridland, CBI deputy director-general, was also concerned. "Although business rates will fall overall, in some areas of the country they will rise sharply, which is worrying at this critical time for the economy," he said.

"We called for the Government to cap business rate increases at lower levels than those announced today. For example, we called for a maximum rise of 7.5% for larger properties, but the Government has announced a maximum rise of 12.5%. This is worrying."