‘Firms have gone bust due to rates burden’

Jo Cox, Labour MP for Batley and Spen
Jo Cox, Labour MP for Batley and Spen
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MANY Yorkshire firms have collapsed because they face an “excessive” business rates burden, according to a leading figure in the region’s property sector.

Robin Ellis, the director of CBRE in Leeds, also claimed that Yorkshire firms have been subsidising businesses in prosperous parts of London because the Government has decided to postpone the business rates revaluation from 2015 to 2017. He has echoed the concerns of Jo Cox, the Labour MP for Batley and Spen, who told the House of Commons this week that the postponement of the revaluation has increased the North-South divide.

Mr Ellis said: “A rating revaluation is an opportunity to reflect the change in relative values between property sectors and locations.

“The deferral of the revaluation from 2015 to 2017 has hit businesses in Yorkshire disproportionately, because the recession caused rents to fall dramatically. Conversely, in parts of London and the South East, rental levels have been far more robust. Historically, rates payable accounted for approximately 45 per cent of rental value,’’ he added. “In recent years it has not been unusual to see rates for properties in the Yorkshire region exceed rents. Effectively, Yorkshire businesses have been subsidising areas of London and this situation has been prolonged by the deferral of the next revaluation. Undoubtedly, many businesses have failed, directly as a consequence of the excessive rates burden. The 2017 revaluation is long overdue.”

Mrs Cox has called on the Government to investigate how businesses in her constituency “like so many in the North” were disadvantaged by the suspension of the business rates revaluation. She said the decision had been a major barrier to firms of all sizes.

Jeremy Blackburn, the RICS (Royal Institution of Chartered Surveyors) head of policy, said that revaluations create winners and losers.

He added: “It is clear that many businesses would have expected their rates liability to reduce if the 2015 revaluation had gone ahead, as the new rates would have been based on April 2013 rental values.

“In general, those values are likely to have reduced since the last valuation which took place in April 2008, as this was prior to the worst effects of the banking crash and recession which saw significant falls in rental levels from which markets are still recovering. However, as any general rental value reduction would have to be counterbalanced by a corresponding increase in the national business rate, Government took the view that it would be inadvisable to go ahead with the 2015 revaluation in the interest of rates stability during such market recovery. In general, rental values will have fallen more in parts of Northern England than in the more prosperous areas of the South so that businesses in parts of Yorkshire and Humber will have paid higher rates for longer than they needed to, as a result of the postponement of the revaluation until 2017.”

He said fairness in business rates has a role to play in bridging the North-South divide, but other factors also come into play.

He added: “The current move towards devolution of central Government powers to local government, including potentially more control over local business taxes, is a fundamental change in the way this country is governed designed to generate greater economic growth in the English regions outside of London.”

Jonathan Oxley, regional chairman of the Institute of Directors, said business rates had been cited by manufacturers as one of the factors that made the UK uncompetitive.

The Government wants to support businesses and ease the burden of business rates, a Treasury spokesman said.

She added: “That’s why we’re running a wide-ranging review of business rates and why we announced a £1bn package of support which included capping business rates rises this year, introducing rates relief for 575,000 small businesses and funding a £1,500 discount for shops, pubs and cafes..The decision to postpone the revaluation was made in order to provide more certainty for businesses. It was expected that a revaluation in 2015 would have led to more businesses facing increased, rather than decreased, bills.”