• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Guy Ware: in search of a credible solution for business rates appeals

0
  • by Guest
  • in Resources
  • — 21 Jun, 2016

 

Business rates appeals are a problem. Guy Ware writes that without resolving the appeals issue business rates retention may be “fundamentally flawed”.

Guy Ware

Guy Ware

As the old adage has it, if you owe the bank a thousand pounds, you’re in trouble; if you owe the bank a million pounds, the bank’s in trouble. Adjust for inflation – particularly the eye-watering inflation of London’s property market – and you have a reasonable portrait of the dilemma created by the sheer scale of business rates appeals.

In Westminster, 34% of the rating list is under appeal; in the City, it’s 40%. That’s a great deal of money. By March 2017 the GLA estimate that between them London’s authorities will have £1.3bn tied up in provisions for unresolved appeals.

The date is important, because at that point the 2017 revaluation will kick in, and a whole new tsunami of claims will come crashing down upon us.

And within three years of that – long before those new appeals are all resolved – local government as a whole will be retaining all its business rates to fund services and investment. Except that all the money set aside for appeals can’t fund anything.

Devolution mockery

Meanwhile, the scale of appeals threatens to make a mockery of the government’s ambition for devolving business rates in the first place – to increase overall economic growth by incentivising local councils to promote growth within their areas.

Our analysis shows that in London there has so far been no correlation between economic growth within boroughs and the level of rates income they retain. The picture in the rest of the country is unlikely to be any different.

There are several reasons for this, including the fact that business rates only recognise the physical development of new property, not the economic productivity of the businesses within those properties, and the sheer luck factor of whether major developments opened before or after the baselines were set.

But appeals, and the volatility they create, are right up there, undermining incentives and blowing regeneration business cases apart.

Which is why we were pleased to see the Communities and Local Government Committee recently focusing on the issue in their interim report, 100 per cent retention of business rates: issues for consideration. In their sober words: “Appeals pose a major challenge to 100 per cent retention and it is essential that the issue is resolved before 2020.”

We couldn’t agree more.

Big ideas

There are plenty of ideas around at the moment: the appeal process should be quicker, to reduce uncertainty; it should be paid for, to deter “speculative” appeals. Revaluations should be more frequent (to reduce the scale of changes and the level of backdating). Revaluations should be less frequent (to reduce the number of appeals). The Valuation Office Agency should have more resources; the VOA should have fewer resources and be largely replaced by a system of online self-assessment. The financial impact of appeals should be met by income from the central list, not by individual councils.

The appeal process has been the subject of one consultation; the revaluation process is currently the subject of another. The joint CLG/LGA working groups on business rate retention are beavering away on the issue.

Between us, we will come up with solutions. When we do, for the tax to be credible to both businesses and local government, those solutions should be based on two clear principles: valuations must be accurate and timely; and local councils should not bear the risk of errors over which they have absolutely no control.

Because the CLG Committee is right: if we can’t crack appeals, business rate retention may be fundamentally flawed.

Guy Ware is director of finance, performance and procurement at London Councils.

Get the Room151 Newsletter

Share

You may also like...

  • Calderdale takes in-house accounting software to market Calderdale takes in-house accounting software to market 13 Nov, 2014
  • ‘Core offer’ not enough to reduce county’s budget gap ‘Core offer’ not enough to reduce county’s budget gap 9 Jul, 2019
  • CIPFA backs alternative tool for measuring councils’ financial resilience CIPFA backs alternative tool for measuring councils’ financial resilience 9 Jul, 2019
  • Richard Harbord: Slow work on business rates and Surrey’s council tax referendum Richard Harbord: Slow work on business rates and Surrey’s council tax referendum 25 Jan, 2017

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 13 hours ago

    Going beyond the standard metrics for climate change: Sponsored article: With climate change an investment imperative and an imminent reporting requirement, Ritesh Bamania argues UK pension schemes should look beyond today’s standard metrics. With… dlvr.it/RtnpLS pic.twitter.com/6ABaFHyS9I

    Room151 2 days ago

    LGPS webinar: Governance the key to TCFD implementation: LGPS funds have been warned that governance is it at the here of Whitehall plans to impose a new climate reporting regime on pension funds. In January the Department for[...] dlvr.it/RtjwNq pic.twitter.com/YMiMdmRyzU

    Room151 2 days ago

    LGPS webinar: Central bank management of bond purchasing could affect all asset classes: When the government debt caused by the pandemic is eventually tackled there may be a huge impact on assets of all classes, according to a leading investment expert… dlvr.it/RtjwJx pic.twitter.com/7v8K5vMYHo

    Room151 2 days ago

    #LGPS readers...what to do about #bonds? room151.co.uk/blogs/lgps-web… @BrunelPP 's new CIO, David Vickers tackles a problematic area #centralbanks #assetallocation #fixedincome pic.twitter.com/yUJr0azbKv

    Room151 2 days ago

    LGPS Challenges: Balancing Realpolitik and responsible investment: Elizabeth M. Carey warns of the perils of an ESG echo chamber as countries outside the West continue to invest in fossil fuels. Anyone working with the LGPS probably feels[...] dlvr.it/RtjMpq pic.twitter.com/MykIYxuYri

    Room151 5 days ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 6 days ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 6 days ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

    Room151 7 days ago

    What role will climate change have on the pricing of government bonds?: Sponsored article: Kerry Duffain finds that “vulnerability and resilience to climate change” have a significant impact on the cost of government borrowing. Ardea Investment… dlvr.it/RtNKv7 pic.twitter.com/wDjT31x4Yt

    Room151 1 week ago

    ESGenius: Slashing emissions will fuel green growth for decades: Sponsored article: Velislava Dimitrova argues that a big enough investment could mean transition to a low, or no, carbon economy can become a reality. The world needs to slash carbon[...] dlvr.it/RtKZJp pic.twitter.com/cd8S3ijERl

    Room151 1 week ago

    Prudential code: “Not perfect, but its heart is in the right place”: The new Prudential Code offers revised rules for borrowing. Nikki Bishop is sceptical it will work while Gary Fielding offers his support. Nikki Bishop I have been asked to give[...] dlvr.it/RtKZFh pic.twitter.com/OriN28lXcb

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story James Bevan: Brexit and states of confusion
  • Next story Gateway to social benefits – Enfield’s housing enterprise

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.