Reaction from the industry to the planned review into business rates, including from John Lewis Partnership boss Sir Charlie Mayfield.

Sir Charlie Mayfield, chairman of the John Lewis Partnership and BRC chairman

“I welcome the commitment to undertake a comprehensive review of the business rates system.  A root-and-branch reform of business rates is needed to protect town centres, without punishing retailers who trade online because rates are so expensive. That reform should take account of the total amount of business rates, overall economic performance and should include positive incentives such as encouraging energy efficiency.”

 

Kingfisher boss Sir Ian Cheshire

“It is great we have got a commitment from the Government and it very much puts business rates firmly on the to-do list. I was talking to a senior civil servant this afternoon who said it will get proper attention and is not a kick into the long grass. There needs to be a system that reflects economic activity rather than sticking to a historical basis of how much property is used and the Government needs to think about objectives such as how does it help in creating employment. One of the questions you have to ask is how level is the playing field and would we need to have some kind of tax on activity? There should not be distortions in taxation so if there are they should be levelled out.”

 

Asda chief executive Andy Clarke

“Today’s announcement follows longstanding calls from myself and the business community, and although overdue, is an important first step on the road to reforming business rates for the modern economy. This news shows us that Government recognises the investment and jobs retail expansion creates, and that the current system has been especially regressive in recent years. My hope now is that this review leads to fundamental change of an outdated system so that businesses are able to invest with certainty and drive growth in the UK. I look forward to working with the Government to achieve the changes UK businesses badly need.”‪

 

John Rogers, Sainsbury’s chief financial officer and chair of the BRC industry-wide group looking at the issue of business rates

“We welcome the full review of the structure of business rates.  A clear consensus has emerged across businesses of all sizes and from all sectors - our current outdated system of business rates isn’t just a retail problem, but a business problem. We will be fully engaging with the review to ensure we get a new system which is fit for purpose in the 21st century.”

 

Former Sainsbury’s boss Justin King

“Property and space is not a proxy for economic activity and some of the tinkering of the business rates system could be argued to have exacerbated problems for the high street. I would be very surprised if the review does not start with a simple idea, which is that the sum of money that is raised by business rates should still be raised but in a different way that is more equitable. It has to be spread evenly across all retailers regardless if they have shops because the services business rates pay for are used by all companies. We have this incredibly efficient thing called postcodes and everyone who delivers to people’s homes knows the address they deliver to so it is perfectly possible for people to measure what their sales are postcode by postcode.  If you base business rates on sales rather than space then by definition it will be equitable. Let’s hope it’s a real review that leads to meaningful change.”

Home Retail chief executive John Walden

“We welcome the pragmatic steps the Government is taking to re-dress the archaic business rates system.  The commitment to a cap for the forthcoming year is a welcome measure in the short-term, and a more fundamental review of the underlying structure is essential to help towns and villages throughout the UK survive, and improve their prospects for success in years to come.

“We share the principles of the BRC which suggest that the disproportionate amount of business rates and other taxes that bricks and mortar retailers pay should be shared equitably across industries, while flexing with overall economic performance.  Retailing serves a critical role in the UK as a source of employment and career development, and is essential to the revitalisation of our high streets. ”  

Julian Dunkerton, co-founder of SuperGroup

“It needs to be a fixed percentage of rent paid, because what you’ve got is this discrepancy regionally where the rates of a percentage of rent paid varies so dramatically. Landlords have understood the economics of what’s happening, so grade A sites get grade A rents, and grade C sites, get grade C rents but rates have not followed suit in the same way, so they need to be a percentage of the rent paid. [The current situation] does mean that we’re not opening in certain sites. If it’s related to the rents payable, it’s a fixed percentage and we all understand where we are, then that helps us to make an investment case for new sites sooner rather than later.”

 

Mike Shearwood, chief executive of Karen Millen

“It’s great that the Chancellor has alluded to the fact there’s an issue. Worringly a review can mean that business rates could go up or down - that’s the reality of the situation. There’s no indication of what it might include so I’ll wait and see - I won’t hold my breath. I am pleased with the cap.”

 

British Retail Consortium director-general Helen Dickinson

“We very much welcome the commitment to undertake a comprehensive review of the business rates system.  We want a system that brings investment and jobs to the high street without punishing retailers who trade online. The retail industry is the largest rates payer, contributing over a quarter of the total rates tax take. Today’s short-term support package will be of enormous help to those struggling to keep their businesses open on the high street.”

BRC is calling for: The total amount of business rates to be reduced; that business rates should flex with overall economic performance as other taxes do; that business rates should be shared equitably across different industries; and that the system should have positive incentives such as encouraging energy efficiency

 

Business rates expert Paul Turner-Mitchell

“Successive Government ministers have dismissed calls for the current administrative review into business rates to be extended yet it would seem that we now finally have the pledge of a root-and-branch review which must be warmly welcomed and a step in the right direction. The cries for business rate reform have been loud and clear for three long years, from retail to manufacturing, and those cries have now certainly been heard at the doors of Westminster.

“We should exempt over 1 million small properties completely from the burden of business rates. They contribute just 6% of the total take and account for two thirds of all properties. This would enhance a move to annual revaluations and we need an end to inflation-linked increases which has increased England’s property tax bill by over £5bn during the life of this Parliament. This would be revolutionary, creating a system that was fairer, easier to implement and responsive to economic conditions.”

 

British Property Federation chief executive Liz Peace

“Undertaking a root-and-branch review of the system is a big decision which many politicians have shied away from, and it makes today’s announcement particularly welcome. We hope it is no-holds-barred and will deliver something fit for the 21st century, and one that benefits all sectors of the economy. We look forward to making a positive contribution on that basis.”

 

EY head of tax policy Chris Sanger

“The current iteration of the business rates system originates from the same consultation document that gave birth to the Poll Tax, but the so-called “Non-Domestic Rates” has well out-lived its useful life. The system is inherently unresponsive to the economy, lumpy and distortive and does not reflect changes in rental values between the revaluations.

“Unfortunately the small print of the Autumn Statement constrains the review to being fiscally-neutral rather than being wholly unconstrained. However, in reforming the tax the Treasury and Department for Local Government and Communities will need to think through the implications of devolution.

“The introduction of the current system was prompted by concerns that councils would increase taxes on business rather than their constituents, and this will remain a worry to retailers. It would be a bad outcome for retailers to achieve their dream of a fairer system only to have the rate rise considerably.”

CBRE head of retail rating Tim Attridge

“It is widely known that the current business rates system is not fit for purpose. We call for a commitment to reform the system and hope this initial move by the Chancellor will ensure frequent revaluations are met to track the rental markets to which business rates are linked. This would prevent a recurrence of the current situation where rateable values remain aligned to the pre-recession rental levels of April 2008 which is simply unacceptable.”

 

More to follow…..