Spring Budget 2017: Regional property sector reaction

March 9, 2017
By

The West of England’s property industry has rounded on Chancellor Philip Hammond, accusing him of failing to listen to pleas to ease the burden of higher business rates.

While the Budget included measures to help some business, critics called it too little, too late and said most still faced swingeing increases.

Business rate experts at West property agents Alder King claimed the Budget had left many businesses frustrated and disappointed.

Despite a high-profile campaign ahead of the Budget urging reform, Alder King said many businesses would still have to shoulder what are in some cases extremely hefty rate increases once the revaluation comes into effect on April 1.

Partner Alan Morrish, pictured right, said: “The reliefs announced by the Chancellor totalling £435m, while welcome, are a drop in the ocean compared to the £25bn a year that is raised through business rates.

“The Chancellor has made a token effort but quite frankly has fallen short of the mark.”

He welcomed the transitional relief, with measures including limiting any increases for small businesses with just one property to £50 a month. The majority of pubs will also receive extra help, with a £1,000 discount on their bill – but for one year only.

“Even so many pubs will still face dramatic increases from next month,” said Mr Morrish. “For example, one pub in Swindon will see its rates bill increase by £33,000 per annum this year and by a further £9,000 per annum next year.”

He also said the £300m hardship fund announced by the Chancellor to be administered by local councils would only add another administrative burden for both councils and businesses. 

“These measures are, as other commentators have said, simply a sticking plaster on a chronically ill patient. The government has yet to announce its feedback on the recent business rates consultation process which closed last September and we hope this will feature in the Autumn 2017 Budget. 

“It appears that the government is moving towards self-assessment on business rates and more frequent revaluations every three years rather than every five. This would be welcome, removing large variances in business rates obligations and giving businesses greater stability.”

Colliers International head of rating John Webber dismissed the measures as “too little, too late”.

He added: “It is not the ‘Budget for business’ that the Chancellor wants us to believe, all the time he proposes swingeing rates’ increases for thousands of firms. Yes, for small businesses coming out of Small Business Rate Relief (SBBR), this Budget will offer an olive branch, but will not delay the inevitable increases coming down the road.

“We are still awaiting the government’s response on the last review on business rates reform. Yet another review into business rates is a waste of time and money. It is absolutely clear that more frequent revaluations – even, three-yearly – would go a very long way to improve the current system.

“Although on the surface, a rates discount for pubs seems a positive step, it is only for ‘small pubs’. European State aid rules limit the amount of discount any one company can receive from government. For larger pub chains, which may have already received Government support, this new discount is simply a fiction.

“With around 326 local authorities in England, the Chancellor’s ‘discretionary fund’ means just £990,000 per council to offer relief to businesses over five years. This is clearly a paltry amount given the government has caused these staggering increases itself.”

The firm’s Bristol office head of rating Ben Batchelor-Wylam, pictured left, said city businesses faced further frustrations as the Chancellor had failed to address core issues.

“Not least an underfunded Valuation Office Agency, huge numbers of outstanding appeals, inappropriate and excessive pressures from HMRC and local authorities who are now becoming ever more influential in the way appeals are dealt with,” he said.

Rating partner at regional agents Hartnell Taylor Cook, Martin Davenport, welcomed the additional relief and help for pubs but said they did not go far enough.

“There are a large number restaurants and retailers who are going to be as hard hit as the pubs but there is no additional relief for them and no announcement to re-introduce the retail relief despite calls for it.

“The £300m fund to be provided to the local authorities to distribute to deserving cases has to be welcomed but until we have the fine details, I am concerned there could be too many ambiguities with its implementation and lead to diverse regional differences. Care and consistency will be required to ensure all deserving cases receive relief.

“I am also disappointed the Chancellor has not removed the ‘reasonable professional judgment clause’ which is the equivalent of not giving a reduction even if one is merited. This can’t be fair and needs to be knocked on the head.

“I do agree there needs to be consideration on how digitally based businesses can be taxed in the future and how the imposition of business rates can be made a smoother and fairer system in the future.”

Leigh Richardson, senior director at property adviser GVA in the South West, accused the Chancellor of “simply not listening” to the majority of business facing significant uplifts from the 2017 revaluation.

“Pre Budget, GVA laid out a strong case for the government to find £1.75bn to help alleviate business concerns,” he said.

“This was principally through capping liability increases for all business to revert back to no higher 12.5%, rather than the current cap of 42%. However, the Chancellor only committed to cut business rates by an additional £435m through targeting small business, pubs and specialist hardship cases.

“Pre Budget hype promised more from the Chancellor. He has not listened. For a tax system to impose on the worst affected a 42% increase in their liability and so clearly differentiate between small and all other businesses, is in our view inequitable.

“The devil will be in the detail as to the rules for distributing the hardship fund. However, we have real concerns as to whether local authorities will fairly distribute the additional £300m hardship relief fund. We simply don’t believe that relief in a tax system be based on those that shout loudest.”

 

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