Politicians need to give us the detail on business rates – not just vague statements of intent

Seeing the issue of business rates resurfacing in the news is bittersweet – bittersweet because if the system was working as it should, we would not need to hear about them at all.

Unfortunately, we hear about business rates repeatedly because they are seen as one of the primary reasons for high street failure. Over the party conference season, they once again emerged as one of the main nettles politicians still need to grasp. With an election year fast approaching, now is the time to do just that.

The business rates system allows the government to levy eye-wateringly high taxes from commercial property simply for being there, before a penny of takings is earned, and at 51p in the pound, they are at their highest ever level. It is therefore no surprise that no chancellor has yet acted decisively to reform the system. Why would they given the income business rates generate, including funding local public services?

However, politicians of all hues admit that the system is broken and acknowledge that reform is needed. The question is: will they walk the walk as well as talk the talk? It feels like too big a job for a government that is still finding its feet after the political chaos that has followed the Covid pandemic. It would appear the civil service doesn’t have the bandwidth or the drive to design a reform programme for one of the most complex systems of raising revenue in the country.

Our elected politicians at least talk of action, even if reform has so far been timid. The Conservatives last week claimed that the Non-Domestic Rating Act 2023 “will support businesses by modernising the business rates system to incentivise property improvements and support more frequent revaluations”. They omitted to mention the red tape that will come with their unnecessary new “Duty to Notify” the Valuation Office of any changes to properties on the register.

This is shuffling the cards rather than playing the hand. If that is all they are going to do by way of reform, they are not addressing the fundamental problem of the cost of business rates and we will see the current steady exodus from our town centres turn into a stampede.

Labour at least recognise the crisis. As long ago as 2021, shadow chancellor Rachel Reeves vowed to abolish business rates and replace them with a fairer system. But she hasn’t yet spelled out how. Until we see the numbers, all there is to go on is good intentions. If she were to announce a plan to reduce business rates by 5p a year down to a reasonable level, over the first term of a Labour government, I have no doubt that investment would flood back into our town centres.

More properties – and more valuable properties – would begin to appear on the ratings list, bringing in more revenue. More people would be employed in the shops, services and offices that would open as a result, bringing in more revenue. And more profits would be made by bricks and mortar traders, bringing in more revenue.

I take hope from Labour’s recognition that this as a matter of urgency. If we don’t fix the system, we will see more and more businesses, both large and small, being forced to close their doors. But we have to reserve judgement until we have seen the detail of their plans. Four years ago, the Conservative Party pledged a fundamental review of business rates and cuts in rates for shops. Nothing has fundamentally changed.

Both parties are today presenting themselves to the electorate as agents of change. Only when they have grasped the nettle and explained the detail on what changes they plan to make, will we be able make an informed judgement of their plans.