Localism Bill means rates vote victory

14 December 2010

A new legal requirement that there must be a business vote in favour before the introduction of any Business Rates Supplement (BRS) is good news for retailers and a major victory for the British Retail Consortium (BRC).

An obligation on English local councils outside London to poll businesses and secure majority support before any BRS is introduced is included in the Government’s Localism Bill published last night (Monday).

Since April 2010 councils have had the power to add up to five per cent to businesses’ rates bills - to fund local economic development and infrastructure projects. Over the last three years, the BRC has been at the forefront of the campaign for compulsory business ballots to ensure they are only able to do that for projects which have business support.

The BRC had long feared that BRS could be applied for purposes beyond delivering specific projects with a clear benefit for the businesses footing the bill.

BRC calculations indicate retailers in England (outside London) could have faced over £125 million of extra tax each year. Now that can only be imposed where they agree to it.

British Retail Consortium Director General Stephen Robertson said: “Compulsory business ballots are a major victory for the BRC on behalf of vulnerable retailers big and small. It would be fundamentally undemocratic to put extra taxes on local businesses without establishing their views first and assessing the potential impact on jobs.

“Retailers already pay £4.5 billion a year in business rates, a quarter of the total and more than any other sector. Figures compiled for the BRC show that, for example, retailers in Reading alone could have faced one million pounds of extra tax. Now that cannot be introduced without their agreement.”

Work carried out for the BRC by rating specialists Gerald Eve LLP illustrates the potential impact on retailers in three sample locations.

Bolton – 844 business properties with a rateable value which would make them eligible for Business Rates Supplements. Their total rateable value £156,021,750. Of these 162 (19 per cent) are shops. A maximum BRS of 2p in the pound would add £3.12 million to business rates as a whole. £751,150 (24 per cent) of that would come from retailers.

Plymouth – 770 business properties with a rateable value which would make them eligible for Business Rates Supplements. Their total rateable value £163,646,250. Of these 215 (28 per cent) are shops. A maximum BRS of 2p in the pound would add £3.27 million to business rates as a whole. £874,970 (27 per cent) of that would come from retailers.

Reading – 946 business properties with a rateable value which would make them eligible for Business Rates Supplements. Their total rateable value £196,069,500. Of these 227 are shops (24 per cent). A maximum BRS of 2p in the pound would add £3.92 million to business rates as a whole. £1,075,390 (27 per cent) of that would come from retailers.

The BRC also welcomed the option to reduce business rates where this would support regeneration and growth.

Reacting to other aspects of the Localism Bill the BRC said there were many opportunities but also some concerns.

British Retail Consortium Director General Stephen Robertson said: “Giving local decision makers the power to make choices that best suit local circumstances is a sound objective. Successful retailing is all about providing what local customers want.

“The Government wants to unleash enterprise and growth through providing a supportive trading environment. This Bill throws down the gauntlet to local councils who must not respond by inventing new ways to stifle business.

“Subjecting multiple retailers to a mass of conflicting local requirements and regimes would impose costs and undermine investment and job creation.”

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