The great business rates debate

In the policy announcement we were all waiting for Ed Miliband announced that, if elected, Labour would cut business rates in 2015 and freeze rates for small businesses the following year.
The policy received rapturous applause from the Party faithful in Brighton on Tuesday and a favourable response from the business community particularly when compared to the revelations on energy policy. There was criticism by some for scrapping one business tax to fund another and claims from others that Labour is picking sides. The Forum however welcomed the announcement as a strong sign that Labour is willing to take immediate action on the problem of rising rates plaguing the vast majority of our membership.
Away from the bright lights of Brighton, is Labour’s business rates pledge really what small businesses want and need? Or does it spell the beginning of populist policy announcements as we enter the 19 month countdown to May 2015?
Rising business costs was the biggest single financial concern for Forum members when polled earlier this year. The link between rates and the Retail Price Index (RPI) has meant businesses have faced huge increases in their non-domestic rates in recent years. Businesses were hit with a 4.6% increase in 2011, a 5.6% increase in 2012, and a further 2.6% increase in April this year. Almost 95% of all small businesses owners believe the amount they are taxed on property is too high. This is particularly concerning as two thirds see no benefit for the amount of money they pay in non-domestic rates.
Labour’s policy has real merit for Forum members – they want action on business rates and have done for some time. The proposed freeze in 2016 will only be for small businesses which will further help those who have been struggling over the last three years. But given next April will bring a further increase in rates should the Coalition have done more?
The Forum has repeatedly recommended the Government cap rates to stop small businesses falling foul of post-crash inflation instability. However without a similar revenue raising alternative it appears calls on rates have fallen on deaf ears.
Everyone knows the coffers have been far from full in recent years and given that business rates are the third biggest business tax it is easy to see why there has been no generous reduction as yet. But simply ignoring the rates problem and delaying revaluation by two years to 2017 is hardly a consolation to those paying over the odds.
As we head towards this year’s Autumn Statement action on business rates will once again be on the Forum’s wish list and with the Conservative conference kicking off on Sunday we could be debating two different policies on business rate this time next week.
As it stands we’ve got One Nation Labour on one side who think that ‘Britain can do better than this’ and on the other Cameron’s Conservatives and Clegg & Co both claiming to be ‘on the side of British business’.
Whether they win the next general election or not Labour have broken the silence on business rates and have forced the issue to the front of the race for 2015. Will Cameron follow suit and realise the Coalition policy on business rates has worn thin?
Here’s hoping we find out next week.
Fionnuala Horrocks-Burns

The silence has been broken. Labour has a plan for business – well, a two year plan for business rates.