THE Government has been accused of tightening the noose around Northern retailers’ necks.
The comments were made by Leeds-based property firm Sanderson Weatherall in response to the Government’s decision to postpone the next business rates revaluation in England to 2017, a move which some critics believe will make life tougher for people working on Yorkshire’s high streets.
Robert Brown, Sanderson Weatherall’s partner and head of rating, said the policy marked a “blind spot” in the Government’s vision for Britain.
Mr Brown’s comments were echoed by other Yorkshire property professionals, who feared the delay would make it harder for retailers in the north of England to compete with their prosperous neighbours in the south.
The current rating – set in 2010 – is pegged to rents achieved in April 2008, which was close to the top of the market. Many property professionals believe the revaluation should go ahead in 2015 as planned. This revaluation would be linked to rents in April 2013, which would probably be much lower than those recorded in 2008.
Mr Brown said: “The failure of the Government to review rates in accordance with the mandatory five-yearly timetable would not only be detrimental to those currently paying pre-recession based rates, which in many cases are far too high, it will also serve to widen the north-south divide.
“Those in lucrative locations such as London and the south -east, where rental values have increased, will benefit from the move, while hard hit retailers in Northern cities and elsewhere will continue to be suffocated by being charged business rates based on pre-recession values.”
Mr Brown’s concerns were shared by Stuart Hicks, the rating director at Dunlop Heywood, which has offices in Leeds and York, who said the postponement would stop the tax base from being re-set.
He added: “This would have allowed areas that have suffered as a result of the recession, such as the secondary retail and geographical areas in Yorkshire, to benefit and be supported by lower rateable values.
“The other major problem is that 2008 values are artificially high...if anything, we need to bring the revaluation forward to take account of the massive decline in market rents that we have seen in the majority of the country.”
Local Government minister Brandon Lewis confirmed that legislation to postpone the revaluation will be brought forward through the Growth and Infrastructure Bill.
Mr Lewis said: “Business rates are the third biggest outgoing for local firms after rent and staff costs. This decision will avoid local firms and local shops facing unexpected hikes in their business rate bills over the next five years.
“As business rates are linked to inflation, there will be no real term increase in rates over this period. This reform will provide certainty for business to plan and invest, supporting local economic growth.
“Since the last revaluation (based on 2008 valuations), the economy and property market have faced exceptional changes. A revaluation at this point would be likely to result in sharp changes to business rate bills in many parts of the country and in many sectors. Tax stability is vital to businesses looking to grow and help improve the economy.”
Mr Lewis said the Government was committed to maintaining regular five-yearly revaluations, which would resume in England after 2017 “once the economy has had a chance to recover from the financial crisis”.
The policy will complement other measures which give councils incentives to support local firms and shops, Mr Lewis added.
Expert’s shock at delay
A LEEDS-BASED rating expert said he was shocked by the Government’s decision to delay the next business rate revaluation until 2017.
John Hayward, of Eddisons, said yesterday: “This delays any hope of rateable values being realigned with lower rents, as opposed to current rateable values, which are based on rents in 2008, when the market was at its peak. It is incredible that the Government thinks it is supporting businesses by giving them certainty, when in the vast majority of cases they would be paying significantly less in 2015, when the revaluation was due to take place.”
The Government said the delay would ensure that businesses would not face unexpected rises in business rates over the next five years.