Our response to HMT’s tranche 2 call for evidence with recommendations for a fundamental business rates reform.
The CBI has long been calling on the government to urgently reform the business rates system. This change would put business rates back on a sustainable path to supporting investment, economic growth and prosperity across the UK. We have welcomed the government’s review of the business rates system and their subsequent call for evidence and, as business rates is such an important but complex area, the decision to consult in two tranches provides businesses with the necessary time to contribute effectively towards the debate.
As the government and business look to build back better, there is an opportunity to re-think the future of the business rates system. Businesses need certainty to be able to make investment decisions that will deliver the economic growth needed to help rebuild the economy. Business rates reform has a part to play in incentivising green investments in the stock of commercial property, as well as in ensuring that these investments, and by extension growth, is distributed evenly across the country.
We believe there has never been a better time for government to reform an overly complex business rates system and ensure that it is incentivising the right behaviours, is beneficial to business investment, and supportive of other government objectives such as green recovery.
Our tranche 1 response has already highlighted that a large business rates burden, along with the disconnect between the business rates bill incurred by businesses and the state of market demand and economic conditions, can hinder business investment and put a strain on economic activity at times of economic distress.
Our present response combines the views of our members on the link between business rates and business investment, highlighting the role that business rates can play in supporting the economic recovery by boosting investment and growth, as well as how the administrative processes for business rates could be reformed to increase its simplicity.
What does the CBI recommend?
Our recommendations include:
- A phased approach towards more frequent revaluations to be implemented immediately. The government should set out a path to achieving annual revaluations by 2026
- The introduction of a similar measure to Scotland’s Business Growth Accelerator that enables improvements to existing properties to receive a 12-month exemption as the absolute minimum from increased business rates payments to encourage investment in the existing property stock
- A review of the P&M regulations to ensure they are relevant for the 21st century, with a statutory commitment to keeping this under regular review to ensure it keeps pace with a changing economy and advancements in technology
- An exemption of certain existing P&M and new technologies that directly link to the ‘green’ agenda (including solar PV and heat pumps) from the P&M regulations to help stimulate investment in the green economy.
Download our full submission below and please get in touch with Adriana Curca for further information on the CBI’s business rates work.
