The current business rates system is in urgent need of reform. As part of the CBI’s campaign on business rates, we have been calling for government to bring forward the switch from RPI to CPI. The measure of RPI is no longer reflective of the true increase in cost and is therefore no longer an appropriate measure.
Together with other business organisations, the CBI has submitted a letter to the Chancellor setting out the urgency for the government to take action to alleviate the damage of a potential £1.1 billion increase in business rates from April 2018 if business rates continued to be indexed to RPI rather than CPI.
We are calling on the government to change the indexation to CPI at Autumn Budget 2017 from 2018/19 so businesses can benefit from a lower business rates bill immediately. Switching to CPI will bring business rates more in line with other costs, freeing up resource for other more productive activities. As a result, this will support businesses in the short-term.
There is still a longer term issue of how sustainable further increases in the multiplier are, and this remains a significant focus of the CBI’s continuing work on business rates reform.