The UK’s dated business rates are harming businesses and need a major overhaul, claims the Confederation of British Industry (CBI).

Call for changes

The CBI is now calling for the new Conservative government to create a simpler and fairer system when it reviews business rates.

The fact that business rates are 5-times higher than Germany’s and 3-times higher than in France is limiting investment and hampering competitiveness, claims the CBI.

The Government has been running a consultation on business rates, which closed last week. The CBI has submitted its fully-costed response that it says will boost growth, investment and jobs.

The response calls for:

• The smallest properties, with a rateable value of under £12,000, to be exempt from the rates

• More frequent revaluations of properties to take account of economic conditions including changes to rents

• Replacing the Retail Price Index with the Consumer Price Index when calculating rates

Reforms are ‘long overdue’

Katja Hall, CBI Deputy Director-General says the reforms are long overdue and the current, ‘decades-old model’ is harming businesses, especially retailers.

Launching the consultation in March, then Chief Secretary to the Treasury Danny Alexander admitted the system was dated and that since the rates were created, the worlds of commerce and industry had changed ‘beyond recognition’.

He claimed the review would be radical and would ensure the business rates system was fair, efficient and effective.

The CBI added that it does not want to see any powers to set rates devolved to local bodies as they feel it would create an uneven playing field, distort growth and costs companies more.

Finally, it is calling for a clear plan for long term reforms than run past the end of the current Parliament. These would include moving billing and administration of the rates online.

Marcus Dorfman, associate partner, occupier services at Strutt & Parker said: “Many ratepayers are still paying a disproportionately high level of rates compared to their rent, and this can only be re-addressed by the Government imposing more regular revaluations and seeking greater clarity on the rental information provided by commercial occupiers.”