The growing burden of business rates is becoming unsustainable. It’s a major factor when businesses make decisions critical to their future growth, poses a challenge for businesses of all sizes and is distortive across all regions and across many sectors of the economy. The current structure is creating uncertainty that business struggles to operate under. Now is a critical time for the government to act and urgently reform a broken system.
But to put pressure on the government to act, it is imperative that the CBI starts outlining what shape that reform should take. To explore this, the CBI hosted a business rates conference with partners IPTI, Arup and Eversheds. The conference provided a fantastic opportunity for members to hear the latest thinking from leading experts both from the UK and overseas.
CBI President John Allan emphasised why reform to the business rates system cannot come soon enough. This made a great splash in the media: from interviews on BBC breakfast and the Today Programme to coverage in major news outlets including the FT, the Guardian, the BBC, the Press Association, the Times and the Daily Mail. Treasury responded to this media coverage, highlighting that the government are listening to the concerns that business is raising.
Business Rates help fund our vital public services and the local amenities and services that are so important to all of us. Following our review of business rates in 2016, we're introducing reforms that will make the business rates system fairer and lower business rates bills by £13bn over the next five years.— Mel Stride, Financial Secretary to the Treasury
The conference was an opportunity for business, politicians and academics to convene and work together on how to move the agenda forwards on business rates:
- The Rt Hon Mel Stride, Financial Secretary to the Treasury, highlighted the £13 billion that has already been spent on business rates.
- But businesses in different sectors identified that these changes have not gone far enough, and that the business rates system is broken and in need of fundamental reform.
- Members had the opportunity to input directly into the recommendations the TSC will be making to government, following their inquiry as part of Catherine McKinnell’s MP keynote address.
- Enid Slack, leading researcher in property taxation internationally, set out international best practice property taxation and provided some international comparisons for members.
- What does reform actually look like? Experts provided members with an array of ideas on how to address the business rates challenge, from maintaining a property-based tax but introducing substantial changes, to replacing the system with a land value tax or online sales tax.
So what is next for business? This conference has had a huge external impact, putting pressure on the government to make a change, and the CBI will continue to apply this pressure as part of our campaign activity on fair business rates that work for all. One avenue is through our engagement with the TSC: the clerks are attending a member roundtable to gather more detailed evidence directly from business on 23rd May. The second avenue is through our budget submission in the Autumn. Over the summer, we will be developing a CBI position on what reform should look like, working closely with the conference partners, as well as with government to end up with a solution that is fair and sustainable.