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Rates Reform Only Way To Save Uks Dying High Streets

Wednesday, 08 February 2012

The Government must reform the system of business rates for retailers if it is to have any chance of saving the country’s dying high streets, experts have warned.

The annual Shop Vacancy Report from the Local Data Company makes depressing reading, with a fifth of all high street shops in theNorth Westcurrently standing empty, and only marginally fewer in other badly-affected regions, such as the North East.

And while the Government’s high profile retail advisor, Mary Portas, has urged businesses to apply for £1m in state funding to try to halt the decline, experts have warned that without reforming key parts of the business rates system, the fund will have little to no impact.

Nick Sercombe, who has held senior positions within the Valuation Office Agency (VOA[1]) and is now a director at business rates consultancy Ruddle Merz, said the planned increases in business rates, together with the failing system around empty rates relief, could kill off many businesses.

He said: “In some town centres, as many as one in three shops are already empty. If we go ahead with the 5.6 per cent increase in rates planned for April, and there aren’t adequate safety nets for already struggling businesses, how many of those are going to be able to survive long enough to see out the current downturn?

“Press ahead, and it could be the death knell not just for hundreds of individual businesses but for many town centres, and all the other businesses, services and communities which depend on them.”

There was an argument, Mr Sercombe conceded, that the reason some town centres were struggling was because the rise of internet shopping and out-of-town retail parks meant they were simply unviable.

Yet if that was the case, the Government needed to promote investment into property to find alternative uses for the buildings – or risk blowing a hole in many communities by creating centrally-located “ghost towns”.

Instead, empty space relief for empty business space – which was reduced in 2008 to just three months for office premises and six months for industrial premises - was stifling investment.

He added: “Initially we were told that the shift in legislation on empty space was to stop new buildings standing vacant, but we now have more empty shops and offices than ever, and the revised policy is making things worse.

“The previous empty rates relief system, whereby businesses rates bills were halved until occupied encouraged property investment, development, and acquisition - something that is desperately needed to jump-start the economy.

“The system we now have penalises those speculating and investing in property, which has a knock-on effect on numerous different industries.”

Ruddle Merz advises thousands of companies on their business rates to ensure they are paying the most appropriate level. Any business considering appointing a business rates advisor should refer to the Valuation Office’s advice. For more information visit http://www.2010.voa.gov.uk/rli/static/HelpPages/Documents/professional_advice_leaflet.pdf  





Editor’s notes: Ruddle Merz is a specialist business rate consultancy which assists businesses with appeals against their business rates and with managing rate relief. It operates on a self-funding basis (i.e. no saving, no fee). Its fees are based on a fixed percentage of savings achieved.

[1] The Valuation Office Agency is the executive agency of HM Revenue and Customs and is responsible for business rates