A short post from me this time as the business rates review starts to get underway in earnest. As the outcomes become clearer, no doubt I will write more but I want to ease you in gently…
Lord Wolfson is right in principle (that the level of liability needs to come down for retail and, in relative terms, increase for industrial) but not in practice (that this should be achieved by differential multipliers).
I am not a supporter of different multipliers, whether by sector, geography or even business size. One of the rating system's most laudable skills is its capability to arrive at spot valuations; individual assessments for all two million rateable properties in the county based on rental value without the need for banding or similar blunting tools. Each hereditament sits in the Rating List at a value relative to every other. And, all being equal, the liability that flows from these assessments is in equal correlation with their rental values. So, with industrial values increasing and retail values falling, their liabilities should follow the same trend.
But all things are not equal. Unacceptable delays to revaluations, compounded by complicated arrangements of reliefs and supplements, completely undermine this. That is why we have called for these reliefs and supplements to be significantly pared back for revaluation frequency to increase significantly.
To adopt different multipliers, whether by sector, geography or any other characteristic, would undermine the "fairness" created by the initial valuation exercise even further. It would also increase the administrative burden on the VOA and BA (through the need for regular List maintenance or account verification to spot or police change of use or at the margins) and will potentially distort the market by incentivising people to claim they are retailers in order to game the system.
Instead, more frequent revaluations (to keep assessments in line with up to date rental values) and a liability based on a direct percentage of assessment (rather than being impacted by a web of reliefs and supplements) would achieve the same aim called for by Lord Wolfson, provide more certainly and would, put simply, be fairer.
That, coupled with a significantly reduced multiplier, would solve many of the issues that are currently afflicting the rating system.
An interesting point is that the wave of sentiment a couple of years ago to scrap business rates entirely for retail appears to have died away. Perhaps retailers and industry bodies have come to realise it may be a nonstarter as far as the government is concerned. Especially with public finances coming under increasing pressure to underwrite the extraordinarily Coronavirus fiscal measures.