Never a better time to reform business rates

FOR society to thrive, businesses need the confidence to invest.

Now – perhaps more than ever before – growth is essential. Economic ground lost during Covid has yet to be fully recovered, the UK is still adjusting to life beyond the EU, and the climate emergency necessitates seismic shifts in behaviour. None of these challenges can be overcome without business firing on all cylinders.

That is why we should be doing everything possible to create an environment which helps enterprise to flourish.

But our antiquated business rates system is doing the opposite. Instead of rewarding companies which show ambition and progress, we hit them in the pocket – rather than encouraging businesses to invest, we are penalising them.

The system is senseless, unfair and a deterrent for North East firms looking to make green investments.

With COP26 just weeks away, there will never be a better opportunity for reform. This is the moment when the UK can show the world it’s ready to lead the way on net zero, and for Government to prove it is serious about building the high wage, high productivity and high skill economy we all want.

This all begins with a long-awaited overhaul of a system which, right now, sees up to half of business investment potentially subject to business rates. The system has literally become a tax on investment. And businesses are united in their frustration about a system stuck in the past; that’s uncompetitive, unproductive and unfair. The case for change now has cross-party support. Labour set out their plans to eradicate business rates last month and Jake Berry, chair of the Northern Research Group of Conservative MPs, made clear his opposition in a newspaper column last week.

As firms fight to complete their recovery from the pandemic, to build back better, and to overcome significant barriers to growth, the call for action is getting louder.

So much so, the CBI has been joined by 40 trade associations – representing 261,000 businesses and nine million employees – in a joint statement outlining how rates reform could unleash a wave of business investment that this country sorely needs.

Right now, amid a challenging autumn beset by surging gas prices, labour shortages and global supply chain challenges, many North East businesses are thinking twice about investment intentions.

Yet the Chancellor can restore the momentum of the summer unlocking when he lays out his Budget at the end of the month. Business will hope he seizes the opportunity to unveil the details behind Government ambitions for growth, as well as the path to achieve it.

Instigating fundamental business rates reform – and setting out an approach which attracts investment – can equip the UK with the tools it needs to grow and build a better economy.

By reducing the overall burden of the business rates system to unlock business investment; by increasing the frequency of business rates revaluations; and by using the system to spur green investment in particular – these reforms will have real-world ramifications for both our local communities and our international competitiveness.

With so much at stake, kicking reforms further into the long grass cannot be the answer.

Sarah Glendinning is regional director of the CBI