Drop plans for another Business Rates hike, Chancellor urged
Hackney Council is calling on the Government to drop a planned 3.9% rise to Business Rates, and offer more support to those already struggling to manage the huge hikes it rolled out this year.
In a letter to Chancellor Philip Hammond, it warns this extra burden could be too much for some businesses in a borough already hit hard by the Government’s recent revaluations. This concern is mirrored nationally by the British Chambers of Commerce, who warn it could present a ‘tipping point’ for many businesses.
As a result of the Government’s revaluations, which went live in April, Hackney’s businesses experienced an average rateable value increase of 46%, the largest in London and five times the England average. This had a dramatic impact on hundreds of businesses in the borough who this year have to pay rates thousands of pounds more than in 2016/17. Many face even greater rises each year until 2021/22, and could end up paying more than twice what they paid previously.
On top of these rises, the annual inflationary rise to Business Rates next April is expected to be 3.9%, considerably higher than recent years.
An extra 3.9% rise on top of what is an already a very challenging time for our local businesses, compounded by the uncertainty surrounding Brexit, would be extremely detrimental to one of London’s most thriving and innovative boroughs. A negative impact on local businesses also hits the communities they serve in terms of lost services, jobs and opportunities.
“Hackney is home to Tech City and hosts clusters of creative and tech enterprises. It has a complex and successful business environment which spans sectors from community services such as garages, barbers, pubs and restaurants, to a wide range of makers and manufactures, to innovative start-ups and expanding firms at the forefront of the fourth industrial revolution.
“We urge the Chancellor to rethink the hike of 3.9% and consider more the medium and long-term sustainability and growth of local businesses and economies. As the Prime Minister said last year, small and medium businesses are the backbone of our country, yet it is precisely these businesses which are bearing the brunt of these ongoing rises to Business Rates. Sadly, I know first-hand that many are already struggling to see a future for themselves.
Cllr Nicholson also asked the Chancellor to consider increasing the current £300m Discretionary Rate Relief Fund for regions experiencing significant rises, such as London and the South East. This provides councils with extra funding to support the hardest hit businesses, but tails off rapidly after the first year. Likewise, the relief scheme for pubs only runs for 2017/18.
Cllr Nicholson said: “These support schemes are welcome, and have benefited businesses in Hackney. However, they are only short-term measures when set against the ongoing year-on-year rises many of our businesses face as they transition to their new valuations.
“For many businesses which have seen huge and disproportionate hikes to their hypothetical rental values, these years will be the most punishing as their annual rises increase and compound on 2017/18.”
The annual inflationary increase to Business Rates is usually based on September’s Retail Price Index, which this year is 3.9%. This is the highest value since 2011, and 1.9 percentage points higher than last year.
Hackney Council has received £7.1m to support businesses through the Discretionary Rate Relief Fund. £4.15m has been allocated for 2017/18, £2m for 2018/19, £893,000 for 2019/20, and £188,000 for 2020/21.
In March this year, Hackney Mayor Philip Glanville, along with Meg Hillier MP and local business owners, handed in a 10,562-strong petition to Downing Street calling on Government to provide more support for businesses facing huge rate hikes.