Devolution of business rates to Wales
Chancellor George Osborne has confirmed that business rates will be fully devolved to Wales now that an agreement has been struck with the Welsh Government.
Mr Osborne also gave a strong signal that Northern Ireland’s Assembly will gain control of corporation tax. Speaking in the commons he gave his strong backing to devolution to England’s cities, adding: “We will also respect and fully implement devolution settlements across our United Kingdom. Today I announce that we recognise the strongly held arguments for devolving corporation tax-setting powers to Northern Ireland.
“The Treasury believes it can be implemented providing the Northern Ireland executive can show it is able to manage the financial implications. The current talks will see if that’s the case and if it is the Government will introduce legislation in this parliament.
“In wales we are working towards a cross-part agreement on further powers for next March. I can confirm today that we have reached agreement with the Welsh Government on the fully devolution of business rates.
“This is a great opportunity to grow the Welsh economy.”
Business rate debts to be written off
Council chiefs are set to write off more than £85,000 in owed business rates because of firms going bust.
The debts were amassed by four companies who had fallen behind payment of National Non-Domestic rates between 2011 and 2013.
The non-payment means a loss of income for both the Worcestershire business rates pool and the Government, which will meet the cost.
A report to Wyre Forest District Council cabinet by finance chief Councillor Nathan Desmond states that the authority made strenuous efforts to recover the money but has had to give up due to the business folding.
The biggest individual debt was accrued by fashion store Creamde, which has a shop on High Street, Kidderminster. The company owed £42,023.02 in rates between the periods’ October 12 2011 to March 31 2012 and April 1 2012 to October 31 2012.
The firm ceased trading and was dissolved with company’s house on September 9 this year.
In all cases the council obtained liability orders and were obtained from Kidderminster Magistrates Court and bailiffs instructed but they were unable to recover the money.
Croydon’s private schools receive £6.8m in business rates relief.
Croydon’s independent schools received £6.8m in business rates relief over the last six years.
Trinity School, part of the whitgift foundation, received £2.1 million in relief between 2009/10 and 2014/15, the highest amount.
A total of seven schools in Croydon are given rates relief. Others in the independent sector are privately funded and are not charities, so do not receive support.
Last week Mark Bishop, headmaster of Trinity, raised questions about Labour’s plans to remove rates relief from independent schools which do not do enough to support those in the state sector.
Trisram Hunt, the shadow education secretary, announced recently that many private schools are not doing enough to earn the “subsidy”.
Sarah Jones, Labour’s prospective candidate for Croydon Central, said all independent schools on the borough should be reviewed to see if they offer value for money.
Proposal for Business Rates reduction to be piloted in Rochdale
The proposal to reduce business rates in selected areas of Rochdale town centre will go before the council’s cabinet on Monday 15th December.
The move will give new businesses moving into an empty shop an 80% discount on their business rates for the first year with a further 50% cut in the second year.
Councillor Richard Farnell, leader of Rochdale Council, said “This is a fantastic scheme which will be a huge boost to our high street and a major step forward in reviving our town centre.
“Business rates are one of the single biggest obstacles facing new businesses and a key reason why many ultimately fail. Nationally over 31,000 independent shops failed in 2013 alone.
“We cannot reverse the decline on our high street – which is mirrored in towns up and down the country – without dealing with this critical issue. Big reductions in business rates will hopefully see new shops open, help bring more shoppers and breathe new life into the town centre.”
The scheme will cover 23 units which are currently empty selected Streets with an aim to tackle the high vacancy rate which is currently 13.5% nationally and 22.7% in Rochdale town centre.
The pilot scheme will cost £100,000. Owners of the empty shops are also being talked too, to persuade them to reduce rents which will be another huge incentive for retailers to open up new shops.
Business Rate reform far away
Last week George Osborne promised to review the structure of business rates but not until 2016 which would also depend on him still being in office. He used a mix of handouts and promises to persuade small businesses that he is close to restructuring the system when in reality; reform of the property tax is a long way off!
About 1.8m so-called “hereditaments” are subject to business rates, yielding about £25bn a year. But retailers bear the brunt and pay about a quarter of the annual bill. For them it is a fixed cost, charged up front before they even open the till.
It is a cumbersome tax, collected by local councils to cover local services but transferred to central government to mete out. The rate is set centrally, tied to the retail price index and based on valuations every five years of individual properties according to complex formulas linking rental values and premiums for big shop windows and proximity to the high street.
The last rate review was in 2012 and was based on values set in 2008. That was when consumers crowded town centres, before the economic downturn and the rise of internet shopping. For the past four years, even as high-street retailers’ revenues and profits have sunk, their rates have risen.
Retailing-trade bodies, lobbying hard for change, have argued that valuing every hereditament individually is expensive and vulnerable to appeals that clog the system. Their solution would be to exempt the 1m smallest businesses that pay just 6% of the total tax take and then recalculate the rateable values of the remaining qualifying businesses more frequently. It works in the Netherlands, so why not England and Wales? That would immediately create a more flexible tax, sensitive to trading patterns and economic fluctuations. The £40m or so that it costs to rate 1.8m premises could be used to revalue 800,000 hereditaments annually instead.