On 1 April, the Government will change the annual uprating of business rates in England from the Retail Prices Index to the Consumer Price Index. They will permanently double Small Business Rate Relief (SBRR) in England, and raise the SBRR threshold in England to rateable values of up to £12,000 tapering to £15,000. This is the first reform of business rates in seven years and whilst the changes may be welcome news to some businesses, a major half a million firms will face rises of up to 300% according to the Federation of Small Businesses, (in some cases transitional relief may be available to lessen this).
Calls have now been made by business groups including the CBI, British Retail Consortium and the Federation of Small Business who explain there is a need to rethink the changes. Concerns have also been raised that small firms could be blocked from appealing against business rate rises and they say there is a need for a rethink about this.
In York, the high cost of business rates is responsible for many businesses struggling to trade across the city and last month Ms Maskell, met with Andrew Percy, Minister with responsibility for the Northern Powerhouse, to say that more needs to be done to help businesses which are struggling in the current economic climate. Ms Maskell contacted the Minister following a number of meetings she had with business owners from Acomb (and other parts of the city). The business owners told the MP that the high cost of business rates is having a damaging impact on many high streets.
However, in York the situation is made worse because business rates are based on over inflated property rental costs and do not represent the amount of footfall on the high street. Often landlords don’t even live in York and operate through agencies. Local businesses explained the cumulative costs of running a business is prohibitive for so many, so outlets are let to a narrow groups of traders and charity outlets, rather than a wide range of independent businesses, which local communities need if they are to thrive.
Rachael Maskell MP says:
“The business rate model, as it stands is now a broken model and is working against local businesses. While everyone understand that paying rates is important, a high street shop is far more than just a business, and forms an essential part of any local community, and therefore must be supported by a system that works. In the past year I have met with business owners from Acomb and elsewhere in the city who have raised concerns about the high cost of their business rates.
"One of the main problems we have in York is that business rates are based on York’s above average rents so that traders are hit twice over. They have to pay sky high rents and also large sums in business rates. This causes real hardship for many small businesses and I recently met the Minister to call for a review. I told him that once thriving shopping centres, such as Acomb, have seen a real decline in recent years and much more needs to be done to help them. At the same time local businesses in Acomb are working hard to buck this trend, including organising a monthly market.
“I am disappointed that the Government’s reforms still let a great many firms, including Amazon off the hook. Amazon will have business rates cut at most of its warehouses while high street stores are forced to pay more. This cannot be right and I think the Government needs to think again. If any business in my constituency finds itself worse off because of the Government’s reforms I urge the owner to get in touch with me. I will then do everything I can to help and to ensure they are being treated fairly. It’s time for shop owners to speak out.”
The Minister gave assurances that he would get back to Ms. Maskell, and in the interim, she is raising issues with civil servants to address York’s particular problems.