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Government Data on Business Rates Labelled ‘Wildly Misleading’ by Chartered Surveyors

Written by: Craig Newton on Friday 26/02/2016

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Data released by the government on business rates has been described as ‘misleading’ by chartered surveyors and rating experts.

The figures, published on 22nd February, suggest a forecasted £400m leap in rates revenues in the next year is indicative of a growth in new businesses. The claim was made by local government minister, Marcus Jones, who described the increase as being 'due to the sheer volume of new businesses opening up around the UK'.

Jones’ statement has since been leapt upon by critics who highlighted a number of flaws in the data. Jones linked the rates payable next year to the 900,000 extra businesses in the UK compared to 2010 but critics argued the following points:

The fact that the majority of these new businesses are not operating from commercial premises and therefore do not pay business rates.

The fact that many of these new businesses are actually services such as ATM machine sites, telephone masts, Wi-Fi hubs, car parking spaces and similar.

Further criticism describes Jones’ claim as ‘fanciful’ and goes into detail as to exactly why these claims simply don’t stack up with one critic asserting:

"These figures make for good headlines for local government but are a kick in the teeth for hard pressed businesses looking for a cut in their costs and do not stand up to scrutiny. In reality there is absolutely no justification in claims that a further £400m has been raised through new business alone."

Also scrutinised are the damning consequences of George Osborne’s policy to devolve business rates to local authorities. This flagship policy from the Chancellor will come into action in 2020 and will see councils retains all rates revenues growth whereas, currently, 50% of it is handed over to central government.

"The rates retention scheme which came into effect in 2013 and allowed councils to keep 50% growth was intended to encourage business friendly activity and promote local property development," one critic commented.

"In practice local authorities have resorted to protecting their rates revenues by slashing the amount of rates relief they grant and have grown receipts through finding new things to rate. As we have seen from this latest set of data, authorities are unlikely to be able to rely on business growth alone and will look towards maximising revenue wherever they can."

This flagship policy from the Chancellor will come into action in 2020 and will see councils retains all rates revenues growth whereas, currently, 50% of it is handed over to central government.

Written by: Craig Newton on Friday 26/02/2016

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About the author

Craig joined Eddisons in 2011 as an Associate Director after spending 17 years in Leeds in the business rates environment. He has acted for many clients from single property owners to multinationals on a wide range of property from shops to concrete batching plants.

Craig has over 20 years’ experience in the rating field, but the ever-evolving and complex issues in this area means he continues to develop his experience and knowledge.

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