The Government has had to backtrack on its claimed justification for the rate revaluation delay as we at Gerald Eve had predicted.

At last Monday’s second reading of the Growth and Infrastructure Bill, within which the postponement to 2017 is included, the Minister promised to publish estimates prepared by the Government’s Valuation Office Agency (VOA) of the likely effects of the planned 2015 business rates revaluation. This impact assessment was rushed out on Monday afternoon this week just in time for the evidence sessions before the Bill Committee on Tuesday.

When the Bill was introduced in Parliament, the Government claimed that its purpose was to provide certainty for businesses and to wipe out what would have been “large tax hikes” for small shops and firms, highlighting retail as one key sector which would have been adversely affected, together with pubs, hotels and petrol filling stations.

Our own research identified that property values had plummeted in high streets up and down the land since the last revaluation based on 2007/2008 rents and that huge swathes of the high street would have benefited from the 2015 revaluation.

The VOA figures reveal that the Government can no longer claim the retail sector, which makes up 26% of all rateable values, as one that would have faced “big tax hikes”.

Instead they suggest that taking the retail sector as a whole, rate bills would have increased in 2015 by 1%. However, it is London and the food sector which would have borne the brunt of any increases at a 2015 revaluation - hundreds of thousands of high street shops would have received reduced rates bills.  

In their evidence to the Committee, both Edward Cooke from the BCSC and Liz Peace of the British Property Federation called for the revaluation postponement to be cancelled so that suffering retailers and other businesses could receive the benefits that the 2015 revaluation would have brought.

Despite the clear backtracking, the Government continues to claim that 800,000 properties would have faced increased bills following the 2015 revaluation while only 300,000 would have paid less.

Frankly, at the high level of the VOA’s estimates they cannot possibly justify such claims. To do so would require huge numbers of individual property valuations to have been undertaken and these have not been carried out. Even the Government’s own estimates reveal that at least 370,000 businesses would have benefitted.

And in a blatant example of unsubstantiated spin, the only way that the Government can claim that 800,000 properties would have faced increases in 2015, is to assume that most of the 520,000 of properties for which it does not have relevant data would have faced increases.

The bottom line is that the postponement of the revaluation, if confirmed, will condemn struggling businesses to continue to pay excessive rates for a further two years, whilst providing subsidies to those sectors that have prospered despite the recession.

  • Jerry Schurder is Head of Rating at Gerald Eve LLP