Parliament shutdown sees new law to help the high street collapse
10 October 2019, 12:54 | Updated: 10 October 2019, 12:56
New rule to ensure business rates bills in England and Wales are more accurate fails – despite officials already spending £50 million.
A new law aimed at easing pressure for the struggling high street has been scrapped due to the Government closing down Parliament – potentially wasting £50 million of taxpayers’ cash in the process.
The legislation was due to ensure business rates bills for all commercial premises would be reassessed every three years, rather than the current five-year period, whilst bringing forward the next revaluation to 2021.
Campaigners who had pushed for the change to ensure bills are more accurate criticised the decision and urged the Government to reintroduce the bill as soon as Parliament sits again next week.
Government inspectors from the Valuation Office Agency (VOA) have already spent around £50 million carrying out the revaluation process of non-domestic properties in England and Wales – with officials assuming the changes announced in the 2018 Spring Statement would pass into law.
But unless a new law is brought before Parliament quickly, the VOA will have to do the inspections again – costing a further £50 million. The cost was recently revealed by the VOA at a select committee hearing.
Dominic Curran, property policy adviser at the British Retail Consortium, said: “Once again, Government have allowed this small but crucial piece of legislation to fall by the wayside.
“Retailers across the UK will continue to be overcharged on rates bills based on outdated valuations. This problem is compounded by Downwards Transition – a system that will see retailers overcharged £1.3 billion over a five-year period.
“As a consequence, retail makes up 5% of the economy yet pays 10% of all business taxes and 25% of business rates. The Government must give ratepayers certainty by reintroducing and fast-tracking the Non-Domestic Rating (Lists) Bill in the next session and scrapping the broken system of Downwards Transition.”
The Ministry of Housing, Communities and Local Government, which is responsible for business rates, said a new bill would be reintroduced “in due course” but declined to provide any further details.
A source within the department told the PA news agency that, whilst the Government remained committed to a revaluation of business rates in 2021, things were now back to square one, admitting getting the bill through all the necessary stages in both the House of Commons and House of Lords would now be dependent upon parliamentary time.
Robert Hayton, head of UK business rates at the real estate adviser Altus Group, said that much of the retail sector would be “winners” under a 2021 revaluation with rents falling on many high streets, adding: “What businesses need with their tax affairs is certainty, accuracy and fairness.”
He said: “Failing to reintroduce the bill, or not ensuring its swift passage through Parliament, adds uncertainty about when bills will change and to what level. Retailers, who are expecting their rates bills to fall in April 2021, will feel particularly let-down.”
Rates bills are calculated based on an estimate of the rental value of each property, but these are only calculated every five years and can lead to inflated taxes being paid – especially on the hardest-hit high streets that have seen rents fall but rates remain the same.
The VOA use the rental data two years before imposing the new revaluations, but with Parliament suspended, the Non-Domestic Rating (Lists) Bill 2017-19 collapsed.
Following the 2021 revaluation, the next one was due to take place in 2024 and three years thereafter – as announced by former chancellor Philip Hammond at the Spring Statement in 2018.