Business rates 'entrench disparities between regions', says CBI President John Allan

CBI President John Allan. Pic: CBI.
CBI President John Allan. Pic: CBI.
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An industry leader is stepping up calls for reform of business rates, saying the system is now “unsustainable” and entrenches economic disparities between regions.

John Allan, president of the CBI, will tell a meeting in London today that business rates have been partly to blame for the spate of high street closures.

Thousands of firms try to appeal against their rates, suggesting a lack of confidence and the need for a “fundamental rethink”.

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His warning echoes claims made by leading Yorkshire figures over the need to reform business rates as part of the Love Your High Street campaign launched by The Yorkshire Post.

Mr Allan said part of the problem was uncertainty around when the next rates revaluations take place.

“The last revaluation period was extended from five years to seven. We can now expect revaluations every three years, but in practice, any longer than one year means business rates lag far behind economic cycles and - over the years - the significant rises in UK property costs.

“The result is a system that rewards those places already on their way up in the short term, but eventually pulls the rug from under them, and one that punishes those areas that are already struggling, with boarded up shops an all too common sight.”

As an example he cited the northern town of Redcar, a former industrial powerhouse which saw unemploment rise after the closure of its steelworks. He said: “Firms in the area continued to pay business rates at up to 20 per cent above their rateable value. It’s clearly counterintuitive.”