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Expert suggests business rates are stifling growth

Recent reforms to business rates could be stifling economic growth, suggests one commercial property specialist.

Sarah Davey, who has held senior positions within the Valuation Office Agency, and is now head of business rates consultancy Ruddle Merz, suggests such reforms as rate relief for small business and empty space relief are stunting growth.

She said: “The extension of rates relief for small businesses applies to less than one per cent of the smallest businesses in the UK.

“If any of those businesses start to grow they then find themselves hit with a huge rates bill, so as soon as they start to prosper, they are penalised for it.

“Small businesses actually managing to grow in the current economy are the key to reviving it. The Government needs to build a more supportive system which fosters the growth of small businesses, not stifles it.”

Sarah challenges two other Government initiatives; the recent rates deferral scheme and the revision of empty space policy.

She added: “Theoretically, rates deferment aims to help businesses hit hardest by the economic downturn, but all it does is simply give them the option to put off the inevitable.

“Those that take up the offer because they cannot afford to pay their rates bill will simply get a much bigger one further down the line, when there’s no guarantee that their finances will be in better shape.”

Empty space relief for vacant business space was reduced in 2008, to just three months for office premises and six months for industrial premises, collecting the government an extra £1bn in rates.

Sarah claims the policy has actually exacerbated the problem, suggesting the measures penalise those speculating and investing in property.

This was posted in Bdaily's Members' News section by Tom Keighley .