MPs Demand Wholesale Review Of Business Rates

A committee of MPs has demanded a "wholesale review" of business rates to support local economies, particularly high street retailers.

The Business Committee's report suggested that a Government consultation - which admits the need for reform - would not deliver enough.

Its chairman, Labour MP Adrian Bailey, said: "This is a time for wholesale review and fundamental reform, not for tinkering around the edges.

"Business rates are not fit for purpose and minor administrative changes will not alter that.

"We are not advocating a return to a bygone age, but if high streets are to become thriving community hubs and start ups are to invigorate our town centres the significant barrier to innovation currently posed by business rates must be addressed."

Mary 'Queen of shops' Portas reviewed Britain's high streets

The Committee urges ministers to give a six-month business rates amnesty for firms occupying empty properties and there should be an examination of whether retail taxes should be based on sales rather than the rateable value of a property.

The MPs also suggested that retail needed its own system of business taxation, adding that a six-month amnesty would encourage new businesses to the high street.

But it raised concerns that money allocated to a number of towns following a review headed by retail expert Mary Portas was not being spent.

Around £2.3m was earmarked for so-called Portas Pilots, but Mr Bailey said the Government could not provide evidence of how, or even whether, the money had been spent.

The Portas report, completed more than two years ago, had stressed the need for a review of business rates, the MPs noted.

Mr Bailey added: "British retail is a global success story. Employing around three million people, it is the largest private sector employer in the UK.

"But its traditional home - the high street - is struggling under a system of business rates that comprises one of the highest forms of local property tax in the European Union.

"Amongst the many challenges they face, business rates are the single biggest threat to the survival of retail businesses on the high street.

"A system of business taxation based on physical property is simply no longer appropriate in an increasingly online retail world."

The British Chambers of Commerce and British Retail Consortium were among lobby groups welcoming the MPs' intervention in the debate and demanding radical reform.

A Government spokesman said: "We have taken a series of steps to help local firms and shops with their business rates including announcing over £1bn of business rates support at Autumn Statement 2013.

"Half of this will go to supporting the retail sector through a £1,000 business rates discount for shops, pubs and restaurants and a temporary reoccupation relief to help bring empty shops back into use.

"We are also undertaking a review of business rates administration which will look at longer-term reforms to make the system more transparent, efficient and responsive to economic circumstances."

Toby Perkins, Labour's shadow minister for small business, accused the Government of hitting firms with rising costs.

He said: "Under David Cameron, small firms have seen hikes in business rates of £1,500 on average and many will see further rises next month.

"In contrast, the next Labour government will cut and then freeze business rates to give firms a much-needed boost."

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