More than 100 companies call for overhaul of business rates

More than 100 of Britain’s biggest companies have called for business rates to be overhauled and called the controversial tax a “critical problem” in an open letter that marks the most vocal intervention in the debate so far.

Companies including Tesco, Marks & Spencer and General Motors have signed an open letter, published in The Daily Telegraph on Tuesday, that says business rates are “no longer fit for purpose for the 21st century” and must be revamped in order to “unleash investment”.

The signatories of the letter are primarily retailers, but it has also been backed by manufacturers, bookmakers, coffee shops, gyms, and property companies.

Business rates bring in roughly £25bn for the Treasury every year, but businesses claim the tax has grown out of kilter with economic realities and is hindering investment.

George Osborne has committed to a review of the tax by 2017, but critics are concerned that this will only lead to the Government tinkering with the administrative process behind the tax.

In the letter, the businesses, which also include Boots, Asda, Whitbread, Ladbrokes and Heineken, say: “Business rates are higher than property taxes anywhere else in Europe and are the second highest in the OECD. This is a critical problem for all of British business.”

The letter calls for all political parties to commit to a “fundamental reform” of the tax in the their manifestos for the General Election next year.

It adds: “A modern, sustainable and transparent system would unleash investment that could bring skilled and entry level jobs and new and expanded businesses into our local communities. Those who seek a competitive tax regime as a draw for investment and jobs should apply that logic to business rates.

“It is no longer an option to say that reform is too difficult or complicated and we call on all political parties to commit to fundamental reform in their manifestos for the next General Election.”

Helen Dickinson, director-general of the British Retail Consortium, said the breadth of industries represented in the letter “shows the strength of our collective belief that the existing system is no longer fit for purpose”.

She said: “Today’s open letter proposes that the political parties should make a commitment to look at deeper reform of business rates if they form the next government after the election.”

Business rates are calculated through a valuation of Britain’s property and the annual rate of inflation. The revaluation of property is scheduled to take place every five years, but the Government postponed the valuation that was due to take place in 2013 and enforced in 2015, claiming that it would cause uncertainty for businesses.

This prompted an outcry from businesses that have been left facing a rates bill based on property values in 2008, the peak of the market. This has lead to businesses appealing their rates bill in an attempt to move it in line with present values.

The Department of Communities and Local Government (DCLG) has estimated it will repay £4.2bn between 2010 and 2015 from appeals, including interest charges, which reflects the chaotic state of the existing system.

Jerry Schurder, head of rating at property agent Gerald Eve, said: “It is clearer than ever that businesses across the spectrum are challenging the rating system which, if left unaddressed, will continue to severely impact on enterprises of all sizes and sectors and cause harm to the UK as a place to operate from.

"A property-based tax remains the most appropriate means of raising revenue for local services but it needs significant reform to make it fit for purpose.

“In practice, this means a number of fundamental changes. Most important are a reduction in the overall tax burden alongside more frequent revaluations to allowing the tax to fluctuate in line with prevailing economic conditions and ensure the load is spread as fairly as possible.

“George Osborne must use December’s Autumn Statement to announce an expansion of the terms of reference of the ongoing review of business rates administration to encompass comprehensive reform of rates, with the aim of creating a system that genuinely supports investment and gives businesses a fair deal.”

The letter

As the Daily Telegraph has consistently pointed out, the current system of business rates is no longer fit for purpose for the 21st Century. Business rates are higher than property taxes anywhere else in Europe and are the second highest in the OECD. This is a critical problem for all of British business.

A recent survey demonstrated that 93% of MPs agree that the fundamental reform of business rates would revitalise our high streets and town centres. Manufacturers, retailers, the hospitality trade, property, service industries and businesses large and small are all held back by business rates.

A modern, sustainable and transparent system would unleash investment that could bring skilled and entry level jobs and new and expanded businesses into our local communities.

Those who seek a competitive tax regime as a draw for investment and jobs should apply that logic to business rates.

It is no longer an option to say that reform is too difficult or complicated and we call on all political parties to commit to fundamental reform in their manifestos for the next General Election.

The signatories

General Motors

Tata Steel

BBPA

British Property Federation

Federation of Small Businesses

National Hair Dressers’ Federation

Gala Coral

Ladbrokes

WHSmith

Homebase

Marks & Spencer

Sainsbury’s

Morrisons

B&Q

Screwfix

Intu

Association of Licensed Multiple Retailers

Argos

Thorntons

Timpson

KFC

Bensons

Harveys

BRC

Paperchase

Risk Capital Partners

Rymans

Betfred

John Lewis Partnership

Westminster Property Association

Heineken

Hammerson

Costa

Insite Asset Management

Boots

Mothercare

Hark Group

3663

Foyles

Booksellers

JLL

BIRA

Brighthouse

Greggs

Co-op

HTA

DFS

Gerald Eve

New River Retail Ltd

Retra

Picton Capital Limited

BACTA

Lloyds Pharmacy

Crabtree & Evelyn

Capital Regional

Fenwick

Debenhams

New Look

Hughes Electricals

Wilkinson Cameras

BCSC

Whitbread

F.HINDS

Westfield

Primesight

Freight Transport Association

Business Centres Association

New West End Company

Tesco

Forum for Private Business

British Aggregates Association

TGI Friday’s

Stanhope

Henderson Real Estate

Osborne Group

Holland & Barrett

GNC

Majestic

Land Securities

Premier Foods

Barretts Digital

Stonegate

Tragus

Rural Shop Alliance

Vauxhall

CBRE

Recruitment & Employment Confederation

Cushman & Wakefield

UK Petroleum Industry Association

The Buildings Futures Group

British Chambers of Commerce

Karen Millen

Supergroup

Bargain Booze

Wine Rack

Asda

3 Sisters Food Group

Kronospan

Frogmore

Costcutter

Ann Summers

OMC

Virgin Active

Fitness First

Waterstones

SSI UK

Association of Convenience Stores