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Alliance of London heavyweights calls for business rates reform

Some of the capital’s biggest and most well-known business organisations have joined together with the Mayor of London to voice their opposition to the upcoming business rates rise and called on the government to reform the current system entirely.

Organisations including London Councils, London Chamber, the Federation of Small Businesses and a long list of the capital’s BIDs have all come together to challenge the government’s business rates revaluation which has left some businesses facing a 150% hike from April next year.

They say such a dramatic increase in such a short amount of time, leaves businesses ill-prepared to absorb the added costs, which is estimated to total around £885m, and will put investment, job creation and economic growth at risk.

Deputy Mayor for Business, Rajesh Agrawal, said it was ‘unacceptable’ that firms in London were being forced to swallow double and, in some cases, triple digit increases at such short notice, particularly with the uncertainty surrounding Brexit.

He said: “Our businesses are fundamental to the capital’s thriving economy, but with the uncertainty being created by Brexit, the last thing they need now is a hike in business rates on the scale the Government is proposing from next April.

“It is unacceptable that thousands of firms in the capital are in effect facing 50 per cent increases in their business rates bills with barely six months’ notice.”

While the government has introduced a transitional relief scheme which caps first year increases to 45%, the new alliance argues that this does not go far enough to help support London’s businesses nor does it help businesses generate more income to offset the rise.

Renewing calls for business rates to be devolved to City Hall, Agrawal added that a fairer transitional scheme combined with the ability to raise its own business rates would ultimately benefit the UK economy as a whole.

“It is clear that we need far stronger transitional arrangements to soften the immediate impact and give businesses in the capital chance to plan ahead,” he said. “We also need greater devolution over London’s business rates including local control over future revaluations, so we can invest more in supporting jobs and growth in London, which in turn stimulates the UK economy as a whole.”

Amongst their demands, the alliance, which consists of nearly 40 of the capital’s business groups and 32 London BIDs, has called for:

• A more realistic transitional scheme to allow businesses to better prepare themselves for rates increases
• Government consideration of mitigating policies and projects that can help London businesses generate income to offset the added costs
• A commitment to a long-term review relating to the effectiveness of business rates in their current format.

Councillor Peter John, Executive Member for Business, Skills and Brexit at London Councils echoed Agrawal’s concerns, and said that business rates were a blunt tool that failed to recognise the unique economic and demographic makeup of the capital.

He commented: “The capital’s businesses large and small are the lifeblood of the boroughs. But the current system presents a major threat to the Government’s objective of promoting growth and self-sufficiency.

“If we are to protect businesses and Londoners’ way of life – particularly following the vote to leave the European Union – there must be a fundamental shake-up of the system that recognises the capital’s unique tax base and demographic pressures.”