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London mayor Sadiq Khan has thrown his weight behind calls to extend the current business rates holiday for retail, leisure and hospitality businesses.
Writing to housing secretary Robert Jenrick in a joint letter with the chair of London Councils, Khan requested an extension to the rates relief, which is due to end in March 2021, saying it would be a “lifeline” to businesses hit by the pandemic.
In fact, recent figures released by the government on the Business Rates Appeals System have shown that in England, more than 1,000 new appeals were lodged per day in the last six months. Andrew Goodacre, chief executive of British Independent Retailers Association (Bira), told Speciality Food business rates have been a struggle for independent retailers for years, and it’s “no surprise” they’re lodging appeals.
With no announcement from the government about changes or reductions to business rates, he said retailers are taking matters into their own hands.
More companies are claiming a Material Change of Circumstance (MCC) due to the impact of the lockdown. “Covid-19 has led to the biggest Material Change of Circumstance the country has seen in rating history and the system has been around for over 400 years,” says John Webber, head of business rates at Colliers International. “You could say we are on a wartime footing, and at the moment there is no end in sight.”
Even before England’s second lockdown was in place, John said few businesses were operating at pre-Covid levels. “There is no doubt that their circumstances have changed materially. Footfall has reduced massively, and many offices, shops and restaurants remain closed or on reduced capacity – these are all valid reasons to reduce the rating assessments.”
Andrew believes the appeal process is not fit for purpose. “The Valuation Office Agency (VOA) deals with appeals, and it does not have the resources to deal with the volume of appeals expediently, and that is before this latest rush. I am afraid business will have a long wait before the outcome is known.” In the meantime, Andrew agreed that the government should consider extending the current rates holiday, or at least implementing the 50% retail discount that was agreed prior to Covid-19 .
John also believes business rates need a “radical rethink”. “We believe most of the MCC appeals will succeed – Covid-19 has brought about an unprecedented disruption. The trouble is the time lag between a business paying its rates bill now and receiving rebated funds back from the VOA on a successful appeal. This could take a year – and many businesses may simply not be around then.”
Late last month, Sky news reported that the executives of Co-op, Tesco and Morrisons had written to chancellor Rishi Sunak to overhaul the business rates system. The letter, which was also signed by Andrew Goodacre and other industry leaders, urged the government to permanently reduce business rates by 20% to help create 10,000 jobs in the industry and its supply chain.
In place of the current process, John recommends the VOA gives businesses a rates discount to cut out the middleman. “This will be essential if businesses are to plan ahead and hopefully work through this crisis. The government and VOA must act now to ease the pain or suffer consequences of continued business closures and job losses.”
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