Colliers Says the Chancellor has a Golden opportunity to re-assure businesses
Although the Covid-19 pandemic has forced Rishi Sunak to postpone both his planned autumn budget and the announcement of plans for public spending until the middle of the decade, today he will be outlining what the government intends to spend for the next financial year 2021-22.
According to John Webber, Heads of Business Rates at Colliers International, it is essential the Chancellor does not ignore business rates, which contribute £26 billion net to the economy.
The business rates team at Colliers suggests the Chancellor:
- Announces an extension of the current 2020/2021 100% business rates holiday for the retail and hospitality sectors which is due to end next March- for another six or even twelve months from April 2021; giving the sector time to recover from the impact of the Covid-19 pandemic. It is indeed inconceivable that retailers would be able to take back their business rates commitments in April, particularly as they have missed their normal lucrative November trading period.
- Provides business rates relief for other sectors who have not had the advantages of the business rates holiday. This includes the office sector where many businesses were prohibited from using their offices during Lockdown and workers were told to work from home. Since then many offices have remained empty or only became partly occupied, particularly as the Government insisted on social distancing rules, limiting numbers, discouraging workers from using public transport and now are resorting to lockdown measures again. The financial implications have been dramatic. Colliers appealed to the Government to introduce a business rates holiday for the period of Lockdown and to introduce some reliefs for the disruption to businesses seen since. As we get through a second period of lockdown, this is more important than ever.
- The Government must extend the deadline dates for applications for the lockdown grants– so that businesses can take advantage of the forthcoming relaxation of current State Aid limits. The European Commission’s “Temporary Framework” states that limits on State Aid will increase to euro 3 million per business for those facing a declining turnover (at least 30% compared to the same period of 2019) due to the coronavirus outbreak. The UK Government has applied to introduce the revised limits but is still waiting for clearance to put this into practice. Meanwhile grant application deadlines are looming; so, without an extension it may be too late for many businesses to benefit. At current limitation levels, only the smaller businesses can benefit from grants. Yet these larger employers are the ones responsible for the majority of jobs.
- Makes good on the promise to bring in proper business rates reform. The current system is outdated and puts bricks and mortar retailers at a disadvantage to purely on-line rivals or to other sectors. The Government had said it would report back on the first tranche of its consultation on reform this Autumn. As we move into December, we are still waiting…
In particular, Colliers urges the Government to bring about an immediate reduction in the multiplier to £0.30, from current levels of £0.51 – making business rates a more affordable tax across the board- so all rate payers can benefit. There should also be an immediate reform of the reliefs system also.
- Brings in a business rates arrears moratorium for those businesses, who because of the pandemic have been unable to pay their business rates bills. Colliers suggest this should be until April 2021, allowing businesses a chance to sort out their finances. According to latest appeal figures, in the period April 1st to September 30th 2020, an average of 1000 businesses began the appeal process against their businesses rates assessments, on the grounds of an MCC (Material Change of Circumstance) to their business operations as a result of Covid-19 and Lockdown. This shows the scale of the disruption to businesses from the pandemic.
Many hard-pressed businesses are now receiving enforcement orders from their billing authorities for failure to pay their rates bills. Colliers urges the Government to instruct Local Billing Authorities to show flexibility and support to business rather than stepping up the heavy-handed court summons.
John Webber, Head of Business Rates at Colliers concluded, “The Chancellor has a golden opportunity today to bring some relief to businesses across the country who are struggling as a result of the unprecedented circumstances we have seen in 2020. We urge that he does not ignore business rates and that he reassures businesses that they will not be faced with either untenable bills next Spring or court action now. Failure to do anything may mean the bloodbath we are currently seeing in the retail sector could well spill across other sectors, leading to more closures and job losses across the board.”