The Government has been accused of delivering a “further blow to the country’s struggling high streets” by postponing the revaluation of business rates from 2015 to 2017.
The British Property Federation (BPF) has criticised the move, which will lead to retailers continuing to pay business rates based on “top of the market 2008 rents” for a further two years.
The planned 2015 revaluation would have meant business rates being calculated at 2013 rateable values. Under the Government’s plans, the 2017 change will be calculated at 2015 rateable values, which are likely to be higher than 2013.
The BPF argued that a 2015 revaluation is necessary to enable business rates to be “readjusted downwards in line with today’s economic situation”.
Retail Week and the British Retail Consortium (BRC) are urging retailers to sign the petition to support the joint Fair Rates for Retail campaign, which calls on the Government to freeze rates next year. It also calls for a fairer way of calculating rates, by switching from Retail Prices Index (PRI) to the Consumer Prices Index.
On Tuesday retailers learnt that they faced a £175m business rates bill next year as the RPI measure of inflation rose 2.6% in September.
The business rates increase in April is calculated using the RPI rate for September.
BPF chief executive Liz Peace said: “The decision by Government to delay the revaluation until 2017 is a real shot in the foot for the retail industry.
“A revaluation should shift the burden from those who are suffering to those who are prospering. By postponing the Government is not allowing the downward adjustment that would otherwise take place for suffering retailers.
“The postponement embeds injustices in the current system, where businesses pay top of the market rates in a depressed climate, for an additional two years at the worst possible time. With technological and other advances arguably we should be valuing more frequently, not less. That way, business are paying rates that closer reflect their circumstances.”
Gerald Eve head of rating Jerry Schurder, an expert on business rates, said: “This is awful news for retailers especially and it is preposterous to claim that this provides any real benefit to businesses.
“Business rates are already far too high and are a cause of hardship and vacancies in the high street, because bills are based upon pre-recession rents. Businesses have already waited too long for the rating system to adjust to the state of the economy and to make them wait a further two years will cause much further hardship to the economy.
“The Government claims that the decision will remove uncertainty and assist future budgeting but, frankly, given the choice businesses would far prefer the early prospect of lower bills even if they could not predict the precise amount. This is a perverse decision which will not achieve the claimed benefits and should be strongly opposed.”
The Parliamentary under secretary of state for communities and local government, Brandon Lewis, claimed the decision avoids “local firms and local shops facing unexpected hikes in their business rate bills over the next five years”.
He added: “As business rates are linked to inflation, there will be no real terms increase in rates over this period. This reform will provide certainty for business to plan and invest, supporting local economic growth.”
British Council of Shopping Centres director of policy and public affairs Edward Cooke said: “The Government’s decision to delay the planned 2015 rating revaluation will have a very negative impact on retailers performance and high street resurgence. Business rates are currently crippling many retailers’ margins and the 2015 revaluation would potentially have led to some positive readjustment. The industry will be shocked by this decision.”
British Independent Retailers Association deputy chief executive Michael Weedon said: “Rents are falling now for new leases but rates will go up again by another £175m next year for retail if the government doesn’t do the right thing and freeze the rate. If it does go up it will just turn the rack on those in existing leases. There should be a revaulation now, let alone in 2015 and certainly not in 2017. Five years more of business rate pain will be too much for ailing retailers.”