Policies & Issues: Local Government
Retailing is an extremely property-intensive sector and therefore experiences disproportionate cost burdens due to its complex and extensive customer facing operations. In this challenging economic environment, retailers are particularly concerned about their ability to plan effectively for the long term in the light of increasing property costs and business rate burdens. These costs include:
- the impact of the non-domestic rates revaluation
- the loss of Empty Property Rate Relief
- the introduction of a Business Rate Supplement
As these costs continue to rise against flat or falling margins, many retailers have had to adopt an overly prudent approach to long-term planning which in effect has diverted money from constructive investment in other areas.
1. REVALUATION 2010
The Revaluation in England, Wales and Scotland was implemented on 1 April 2010. The retail sector currently contributes around a quarter of the £24 billion in business rates collected each year, with retailers paying the largest proportion of all rate receipts in the UK. In order to reduce property costs for retailers and to assist retailers to maintain and create employment the BRC considers that it is even more important for Government to ensure that business rates are affordable.
In England, the Government will introduce transitional arrangements that will apply annual caps on both increases and reductions in business rate bills for small and large properties over a five-year period. In 2010/11, an upward cap of 12.5% will apply for large properties. The BRC considers that the Government should have adopted much more robust upward caps in the initial years of the scheme to help businesses negotiate the tough economic challenges in this current environment.
2. BUSINESS RATE SUPPLEMENTS
The Business Rate Supplements Act 2009 permits local authorities to levy a supplement on existing business rates to fund projects which are designed to promote economic development in their local area.
The BRC's position is that businesses must be given as much certainty as possible concerning variations to their business rates. The UK Government must ensure that there are sufficient safeguards to ensure that local authorities do not misuse their power when levying a BRS. We consider these safeguards must include:
- The introduction of a mandatory ballot of all businesses affected before a BRS levy can be introduced.
- A clear framework that holds local authorities to account in the development and implementation of BRS proposals and that allows for an appropriate level of business engagement early in the development process.
3. EMPTY PROPERTY RATE RELIEF
In April 2008, the Government abolished Empty Property Rate (EPR) Relief. This means that businesses currently operating a commercial property will not have to pay business rates for the first three months the property is vacant, but full business rates must be paid if the property is still unoccupied after this (previously, only 50 % of the normal rate was due after the first three months of the property being vacant).
The BRC has consistently called for the reinstatement of EPR Relief. In the 2008 Pre-Budget Report, the Government introduced a temporary EPR Relief threshold of £15,000 in 2009/10. This threshold was increased to £18,000 and extended by another year to 2010/11 in the 2009 Pre-Budget Report. These Government initiatives have reduced business rate liabilities for some businesses by a modest amount.
The BRC's position is that Government should reinstate EPR Relief in full in order to reduce business costs and protect jobs. At the very least, the Government should extend the temporary relief to 2011/12.
4. WORKPLACE PARKING LEVY
The Transport Act 2000 gave local authorities powers to introduce a workplace parking levy, which is a charge on car parking spaces, used for business purposes. Workplace parking levies take the form of a licence fee, and employers must apply for a licence if they provide workplace parking. Local Authorities will determine the amount charged and area covered. Nationally, the charge is likely to vary from area to area depending on the authority concerned. Currently, Nottingham City Council is the only local authority which intends to introduce a Workplace Parking Levy across the local area.
The BRC, along with other major trade associations and business organisations, is strongly opposed to the Workplace Parking Levy, on the basis that it will do little to tackle the real problems of congestion.