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Lightening the Load

The Business Rate Supplement Bill is currently going through Parliament, and proposes that all English upper-tier local authorities have new powers to levy a supplement on the national business rate.

Thank you to all Members who input views to the consultation and to the questions in the last Quarterly Economic Survey. The following issues were included in our response:  

• Many businesses are under pressure to reduce costs and our members do not think that this is the right time to be increasing business taxation.
• There are already negative views about business rates with 68% of our members believing that the 5% inflation increase should have been cancelled.
• A further 18% felt that this should be reduced and 12% delayed.
• The decision to limit the inflation increase to two per cent and give businesses the option of spreading the remaining 3% over the next two years is unlikely to change the view that this increase represents an additional burden to businesses.

A fact sheet on the Business rates deferral scheme 2010-11 can be viewed by clicking here.

There are also Members that are already paying additional business rates through business improvement district (BID) schemes and others in Nottingham that are awaiting a decision about the possible imposition of a Workplace Parking Levy (WPL) to pay for transport infrastructure improvements.

Our members vehemently oppose WPL as this scheme would do little to reduce traffic congestion and is just another mechanism for of raising local funds for infrastructure. Such a scheme is perceived as an unfair form of taxation that is burdensome on businesses. It does not link those who pay the tax with the benefits of the investment and there is no time limit on the tax. In the case of the Nottingham (WPL), the strong opposition from the business community has been ignored.     
 
The views of Derbyshire and Nottinghamshire Chamber Members on business rate supplements (BRS), expressed in a survey in March 2009, have changed a little since the chamber canvassed opinions in September 2007. 

Only 23% would now not support business rate supplements under any circumstances compared with 29% previously. A further 33% of respondents, however, would not support their introduction in the current economic circumstances.

As many companies are struggling to survive during the recession, it cannot be right that they face a raft of new local business taxation. Local authorities should be prevented from establishing new Business Rate Supplements where other local taxation schemes such as a BID or WPL are already in existence.

If local authorities are to be given the flexibility to introduce a supplement, any proposal must be an infrastructure project that business believes is necessary. Businesses need to be convinced that the benefits of investments arising from such a supplement outweigh its costs or that national taxation is reduced to balance out such a rise in taxation. There also needs to be a clear project plan providing time limited ring-fenced additional funds.

There also needs to be ongoing business oversight of the initiative; opportunities for local businesses to bid for contracts and a mandatory business vote.

To assist in maintaining the relationship between local authorities and businesses, the consultation on the project prospectus and any business ballot should be undertaken by independent organisation. 

There is a concern that the increased burden of business rates could be a tipping point for some businesses. In the East Midlands almost 50% of businesses are entitled but do not claim business rates relief. If local authorities are looking to introduce business rate supplements more should be done to increase awareness of such entitlements.

For further information please contact John Dowson, Head of Policy & Representation by email at john.dowson@dncc.co.uk or by telephone at 0115 957 8757.  The final quarterly economic survey report can be viewed by clicking here.