BER20: Business rates - time for Birmingham business to shout loud
Colliers International
This blog post was produced for inclusion in the Birmingham Economic Review for 2020.
The annual Birmingham Economic Review is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce, with contributions from the West Midlands Growth Company. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.
This post is featured in Chapter 1 of the Birmingham Economic Review for 2020, on Birmingham’s Economic Outlook Before and After the COVID-19 Pandemic.
Click here to read the Review.
It is well known that the burden of business rates has been steadily growing over the last 30 years to the point where Birmingham businesses now shoulder an annual burden close to £500 million.
While this had become unsustainable in a buoyant trading environment; in a post Covd-19 world something has to change. In effect the Government, by announcing a 12 months holiday for the retail and hospitality sector, has acknowledged that business rates at £0.51p are unsustainable. This reality check should be rolled out permanently to all businesses in Birmingham, since the effective doubling of the tax burden over the last 30 years has been crippling.
H M Treasury recently announced in July a ‘Business Rates Review’ and have called for evidence by 18th Sept 2020 and 31st Oct 2020. While this is no different from several reviews that have taken place in recent years, the backdrop to this review will mean the Government has no choice but to implement change. Covid-19 has had a massive impact on shopping habits and on work patterns - retail and offices in the city centre are being affected and given the importance of the manufacturing sector in Birmingham; the logistics sector is not immune either.
One way to meet these challenges head on is for the Government to implement the following changes now:
- Reduce the multiplier to £0.30p with effect from April 2021 for all properties.
- Reduce the Rateable Values of all premises affected by Covid-19 by December 2020.
- Reduce the Rateable Values of all properties affected by tram works in the City Centre ASAP
- Introduce an online / delivery levy to pay for the shortfall in any tax take.
The City Council also has a responsibility to help businesses by putting pressure on HMRC that will send the right signals to encourage people to locate in the City, stay in the City and grow in the City. In a post European Union world, the Government can no longer hide behind state aid rules – they have the control to carry out whatever measures are needed to fire up the engines of the Midlands economic machine.
Birmingham is a great City with a mass of potential and a resilient business community. However, a little help from those in a position of power would not go amiss. Therefore, I and others have been canvassing for a sensible and proper business rates reform to alleviate the worst consequences of this punitive tax. Now is the time for Birmingham businesses great and small to make their views known – the link attached gives access to the document.
With the amount of development work underway in Birmingham, HS2 getting ever closer and the Commonwealth Games around the corner now is not the time for business leaders to be quiet about something as destructive as a business rates burden. This needs to be reduced now.
Read more here.
John Webber
Head of Business Rates
Colliers International