Gale's View - Business Rates

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February 22nd 2017

Churchill once said, roughly, that “democracy is a pretty mediocre form of government until you look at all of the others”.

The same might be said of methods of Local Government taxation. In an attempt to reform Domestic Rates Margaret Thatcher`s Conservative Government introduced what was wrongly described but became known as the “Poll Tax”. It seemed at the time fairer and more sensible to charge people individually for the services that they used in a household rather than to base the taxation paid for the emptying of dustbins and the maintenance of roads and schools on the value of an individual property in which, however large, only one person might be living. The introduction of the scheme lead, because of its unintended consequences, to riots in the streets. It was revised and refined and was then abandoned by Michael (now Lord) Heseltine just at the moment when it was actually starting to work properly, As a result we are now stuck with a system of “banding” which owes little to the value of the services that individuals actually use – that classic case of the camel, a horse designed by a committee.

If you believe the bourgeois tabloid newspapers the High Streets are now about to face Armageddon as a result of a review of business rates that should have taken place some time ago. “This” it is said “is the straw that will break the (aforesaid) camel`s back”. That is what Mr. Donald Trump might reasonably have described as “fake news”!

It is absolutely the case that, having been decimated as many key stores have moved from the Town Centre to out-of-town shopping centres with free parking, our High Streets became deserts of under-occupancy from which they have had to try to re-invent themselves. They are also still reeling from the effects of a “double whammy” as the attractions and ease of online shopping have been added to free shopping mall parking. You don`t need to visit the Royal Mail sorting offices at Christmas, as Suzy and I do, to appreciate the huge volume of purchases that have been transferred from small shops to the internet and the slogan “use it or lose it “has never been more meaningful. The last thing that the individual High Street retailer or embryonic small business needs, as we face the impact of “Brexit” and higher prices of goods, is an increase in business rates or any other costs.

This, however, is where the tabloids and the online campaign warriors have declined to let the facts get in the way of “a good story”! It is true that Central and Outer London and parts of Oxfordshire that have been historically under-valued face in some cases considerable business rate increases These areas will benefit from transitional arrangements as the charges that they pay for their services rise but the Government needs to make sure that the law of unintended consequences dose not put some small shops out of business.

There are also a number of proprietors of riding stables and other small rural enterprises who have expressed concerns that, true or false, also have to be and will be addressed . And then there is, in Kent, Dover.

Charlie Elphicke, Dover`s MP, and Craig Mackinlay (Sandwich) have already expressed, with the support of Kent colleagues, their astonishment that of all the Districts in the Country Dover has been singled out for an 11% rate hike. Thanet and Canterbury, in common with the rest of the County including those leafy and prosperous boroughs to the West, will enjoy not the headlined increases but appreciable reductions in business rates designed to reflect the fall in town-centre property values arising from the loss of trade resulting from out-of-town and on-line shopping. 2017-18 will see the biggest cut ever in business rates overall. Dover, though, which experiences many of the same social disadvantages as the other coastal towns, seems to have been chosen to foot a larger bill and that is an anomaly that must be corrected.

The “fake news” lies in the fact that there is no truth in the assertion that “appeals have been banned and hundreds of thousands of small business will be forced to close”. Six hundred thousand smaller businesses will stop paying rates altogether. For ever. Businesses in rural areas will see rates cut by an average of 4.4% and small and medium-sized pubs will pay more than £11 million a year less. ((Claims that the revaluation of businesses will raise £1 billion more for the Treasury reflects not the proceeds of revaluation but the fact that happily the number of businesses is increasing and that there are more and bigger businesses paying into the pot). And the total bill for State schools, another alleged `increase`, is set to fall by £16 million a year.

The business rating system is not perfect and I and my colleagues will always take up cases of injustice where the system has failed to recognise reality but the CBI, the IOD, the British Chamber of Commerce and the Association of Convenience Stores have all said that, until somebody comes up with a viable alternative that really is better and fairer than the one at present in use, they would sooner stick with “the devil we know”. They are basing that view on fact and not on alarmist fantasy.

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