Another annual party conference brings with it yet another commitment to scrap the business rates system. This week it was the turn of the Labour Party in a speech delivered by Rachel Reeves MP, the Shadow Chancellor.

These policy announcements often make for good headlines but often overlook two important factors:

First, on the assumption that any changes would be fiscally neutral, revenue would still have to be found from elsewhere and what might follow may well be worse. The Rating system isn't perfect and HMT's current review desperately needs to deliver change for the better. But the system has weathered plenty of economic storms, adapting to fundamental shifts in how and why we occupy property, and it has stood its ground throughout.

Second, the overwhelming majority of stakeholders, including the ratepayers themselves, do not want to see the system scrapped altogether. Successive consultations have shown this consistently to be the case. And while everyone recognises its deficiencies, most are mindful of the risks borne by radical overhaul.

Having said all this, Labour’s high level announcement trails an as yet undefined tax to replace business rates that sounds rather like the system we currently have, albeit one improved through reform. Although lacking detail, the outline is suggestive of a property-based tax system based on property values (perhaps capital rather than rental), that would be subject to periodic revaluation and that would that would remain a major source of funding to government.

They say this system would “incentivise investment, feature more frequent re-valuations, and instant reductions in bills where property values fall, reward businesses that move into empty premises, encourage, not penalise, green improvements to businesses, and no public services or local authorities will lose out from these changes”. These are all the improvements that are being sought by many as part of the fundamental review but which nonetheless have at their heart a system broadly as it currently is.

So perhaps this announcement is better characterised as a call for reform rather than complete overhaul. And while that headline might lack the same punch, subject to seeing the detail as to what this reform may encompass, this is an announcement which could be broadly supported. Through our leadership of the Rating Surveyors’ Association, we have been engaging with Treasury over the last 18 months as they set out on the journey to reform. Some of those changes will need to be significant in order to put the system back onto an even keel. However, many of the changes will be light touch but would come together to restore trust in this ailing tax.

As this stand, we expect government to issue its report on the fundamental review, and the subsequent consultation on delivering more frequent revaluations, in late October. Only then will it become clear as to whether they are going to be ambitious enough in their efforts to fix the system to the benefit of all stakeholders.