Company bosses today welcomed a review of business rates which aims to make many High Street firms more competitive. But they also urged George Osborne to hand control over the levy to civic leaders so it can be used to fund “critical” capital projects in London and other regions.
The Chancellor’s Autumn Statement package today included a study into business rates which will report for the 2016 Budget.
It could lead to a shake-up of the 400-year-old system which will make it easier for High Street companies to compete against online retailers, though it aims to be fiscally neutral.
John Dickie, director of strategy at business group London First, said: “Business rates are an increasingly distorting and dysfunctional tax.
“It is wrong that an online business with high turnover, high margins and low property costs can pay far less than a company with lower turnover and lower profits, but which has a big presence on the High Street.”
The London Chamber of Commerce stressed the review was “long overdue” and that the business rates system needed a major overhaul.
“Businesses have been paying higher rates for longer due to the current system setting rates based on inflationary increases, regardless of the economic conditions,” a chamber spokeswoman said. “The system should allow more flexibility to respond to changes in the broader economy.
“We also hope that the review considers allowing the leadership of cities to have power to set, and spend, all business rates collected for investment in critical capital projects locally.”
Mr Osborne was also announcing a string of other measures to help businesses keep Britain’s economic recovery going. They include guarantees to unlock around £1 billion in investment for small and medium-sized businesses.The Funding for Lending scheme will be extended for another year, focusing on smaller firms — which he called “the lifeblood of our economy.”
To tackle the homes crisis in London and elsewhere the Government will be able to directly commission housebuilding on public land for the first time in 40 years. The Chancellor also confirmed that he will not raise fuel duty, despite oil prices plunging.
