POLITICS
Unshackling business for growth
The Chamber has written to the Chancellor of the Exchequer, the Rt Hon Philip Hammond (pictured below), calling for a complete overhaul of the ‘broken’ business rates system. It is urging the Chancellor to use reform of
business rates to show his intention to unshackle business to encourage growth. Uniting with the British Chambers of
Commerce network, it is calling for a replacement of the current arrangement with something that recognises a firm’s ability to pay. And it is urging Government to remove its
demand for a cost-neutral alternative to the existing business rates system. In its letter, sent ahead of the Budget, the Chamber says that demanding cost-neutrality for central Government is “severely limiting” the scope of local authorities to achieve fundamental changes to the system, leaving officials able only to “tinker at the edges” of the problem. Removing the demand for cost-neutrality
would give policymakers working alongside the business community sufficient headroom to bring about fundamental change, the letter stressed. Chris Hobson, the Chamber’s Director of
Policy, said: “The guiding principal of reform must be to increase business survival, growth and investment – not just balance spreadsheets at the Exchequer. “The Chancellor had an opportunity in the
Budget to show his intentions to unshackle business for growth and we urged him to use it.” The Chamber also called for the switch from
Retail Price Index to Consumer Price Index as the basis for determining business rates increases each year – as suggested in the Chancellor’s Autumn Statement – to be brought forward from 2020 to this year. And it wants plant and machinery removed from property valuations for business rates assessment to encourage firms to invest even in uncertain times. Chris added: “We
believe this can be achieved as part of a wider simplification of the business rates system, possibly looking at the Dutch model where valuations are based on floor space, use class and benchmark properties.”
26 business network March 2017 The Chamber also called on Mr Hammond to
drop proposals to restrict the ability of the Valuation Tribunal for England to order changes to business rates liabilities. “If draft legislation is introduced as proposed,
a business rates payer could be required to significantly overpay for five years because the Valuation Tribunal for England will not have the power to correct matters,” Chris added. The letter acknowledged that the Chamber’s
Quarterly Economic Survey for the final three months of 2016 had showed members ending the year strongly but recognised that there were concerns about rising prices over the coming 12 months which would impact business margins and investment opportunities. It said that businesses recognised that much
of the debate on prospects to support the UK economy over the coming 12 months would take place against the backdrop of negotiations for the UK to leave the European Union. But it stressed that alongside the Brexit
negotiations, steps need to be taken to reinforce business confidence at home and to demonstrate that the UK remains a great place to do business. The letter said: “Any vision for a successful UK
economy outside the EU must be underpinned by a regulatory and tax environment conducive to good business. “A perennial complaint of Chamber members
is the cumulative impact of Government policy which brings with it a resource burden that increases the day-to-day costs of doing business, costs often driven by the unintended consequences of policy measures that are introduced without a full appreciation of the realities of implementation. “Examples of the above, raised by members in
recent consultations, include (but are not limited to) the Apprenticeship Levy, Pensions Auto- enrolment, Insurance Premium Tax, Dividend Tax, National Living Wage, Immigration Skills Charge, making tax digital, changes to National Insurance and restriction of travel and subsistence costs for small companies. “The Spring Budget provided an opportunity
for Government to demonstrate to business that it hears the message on this and is taking meaningful steps to reduce the increasingly
unbearable high input costs that businesses in the UK face, thereby releasing and freeing up the resources and time needed to pursue growth – there should be a commitment to the introduction of no new measures that increase the input costs on UK business.
Chris Hobson, the Chamber's Director of Policy
‘We urge the Chancellor to act on these requests without delay’
“However, the number one complaint the Chamber receives in this area is with regards to the broken business rates system, which hinders ambition, investment and growth.” The letter proposed four key measures the
Chancellor could take immediately to ease the burden of business rates. They were:
• Abandon the fiscal neutrality principle in business rates reform – an unacceptable barrier to fundamental reform of the business rates system that is unique to that tax
• Bring forward the switch from RPI to CPI, currently planned for April 2020, to April 2017
• Removal of all plant and machinery from the valuation of property for business rates purposes
• Drop proposals to restrict the ability of the Valuation Tribunal for England to order changes to business rates liabilities.
And it said the British Chambers of Commerce network was ready to support Government in successfully delivering a fundamentally reformed business rates system that:
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