Business rates - all change
Discussion
Rents and business rates are linked. The rateable value is essentially the rental value of a property subject to certain assumptions on a specific date, currently 1st April 2008.
Thus date the valuation office have argued is before the recession affected rents.
Playable rates are the then calculate as a pence in the £, based on the rv.
Thus date the valuation office have argued is before the recession affected rents.
Playable rates are the then calculate as a pence in the £, based on the rv.
I don't pay rates on any properties, but I know my way round a Council's collection fund ( the pot that council tax and rates go into before being split up to the organisations that get a share).
So I have a lot of interest in how this policy plays out.
My thoughts so far are
- yes NNDR is a high cost for businesses, but as the demand for local services isn't going away, it will remain important, both politically and financially.
- I had thought the review of business rates was going to consider issues like trying to get parity between internet shops and high street shops. These measures don't strike me as any sort of review: more of a slight tweak
- councils have been "enjoying" 50% risk/ reward in nndr since 2013 (the other half still goes to Whitehall). There was a compensating drop in other funding, so this won't be a windfall
- crucially though, any growth in rated can easily be offset, or outweighed by the impact of appeals ( ie businesses challenging their bill via the independent VOA). Many councils are now facing severe pressures due to this. I believe the council with selafield in their list got royally turned over when 5 years worth of backdated rates had to be paid back from their relatively small general fund
- now, at present councils only face half this risk. Ramping this up to 100% makes the annual budget process a lot more precarious
- It brings about the risk of "begger the neighbour" type policies. Some councils are just richer than others (call it luck if you like, but its usually down to population mix and economic strength). A wealthy council can cut rates and hoover up masses of business park / retail park footage, leaving less lucky councils floundering (and typically there are the ones with the most demand to meet/ less reserves to help out). I don't think this type of approach will fit well with the local authority ethos, as there is often a lot of cross working between councils ( more than between, say Asda and Tescos)
- Finally, and the biggie - it ignores any link between funding and need. In fact, it doesn't ignore it, it tears the head off it and then tramples on its still warm body. Councils have statutory duties placed on them, and there are national expectations around levels of care ( ie how many times your disabled Nan gets helped to the bathroom, the quality and frequency of highway repairs etc). Plus non statutory expectations around street cleaning, access to parks, libraries and so on.
The national funding system (which was never perfect I admit) had disadvantages, and there is a lot to be said for giving councils an incentive to grow the local economy.
But breaking this link between funding and need is going to stretch the current political system pretty hard. I'm sure its coincidence that many of the councils losing are northern unitaries, and many gaining are southern boroughs and shires (the new homes bonus has also been responsible for shifting resources from up north (England) to down south.
From a work point of view this has been good for where I work, but on a personal level, this is just another problem with an economy totally focused on London / SE.
Ps I don't think market forces will be able to equalise this issue over time, because we're talking about the delivery of public services that the market can't by definition provide.
Ian
So I have a lot of interest in how this policy plays out.
My thoughts so far are
- yes NNDR is a high cost for businesses, but as the demand for local services isn't going away, it will remain important, both politically and financially.
- I had thought the review of business rates was going to consider issues like trying to get parity between internet shops and high street shops. These measures don't strike me as any sort of review: more of a slight tweak
- councils have been "enjoying" 50% risk/ reward in nndr since 2013 (the other half still goes to Whitehall). There was a compensating drop in other funding, so this won't be a windfall
- crucially though, any growth in rated can easily be offset, or outweighed by the impact of appeals ( ie businesses challenging their bill via the independent VOA). Many councils are now facing severe pressures due to this. I believe the council with selafield in their list got royally turned over when 5 years worth of backdated rates had to be paid back from their relatively small general fund
- now, at present councils only face half this risk. Ramping this up to 100% makes the annual budget process a lot more precarious
- It brings about the risk of "begger the neighbour" type policies. Some councils are just richer than others (call it luck if you like, but its usually down to population mix and economic strength). A wealthy council can cut rates and hoover up masses of business park / retail park footage, leaving less lucky councils floundering (and typically there are the ones with the most demand to meet/ less reserves to help out). I don't think this type of approach will fit well with the local authority ethos, as there is often a lot of cross working between councils ( more than between, say Asda and Tescos)
- Finally, and the biggie - it ignores any link between funding and need. In fact, it doesn't ignore it, it tears the head off it and then tramples on its still warm body. Councils have statutory duties placed on them, and there are national expectations around levels of care ( ie how many times your disabled Nan gets helped to the bathroom, the quality and frequency of highway repairs etc). Plus non statutory expectations around street cleaning, access to parks, libraries and so on.
The national funding system (which was never perfect I admit) had disadvantages, and there is a lot to be said for giving councils an incentive to grow the local economy.
But breaking this link between funding and need is going to stretch the current political system pretty hard. I'm sure its coincidence that many of the councils losing are northern unitaries, and many gaining are southern boroughs and shires (the new homes bonus has also been responsible for shifting resources from up north (England) to down south.
From a work point of view this has been good for where I work, but on a personal level, this is just another problem with an economy totally focused on London / SE.
Ps I don't think market forces will be able to equalise this issue over time, because we're talking about the delivery of public services that the market can't by definition provide.
Ian
Edited by Ian Geary on Tuesday 6th October 18:33
Ian Geary said:
I don't pay rates on any properties, but I know my way round a Council's collection fund ( the pot that council tax and rates go into before being split up to the organisations that get a share).
So I have a lot of interest in how this policy plays out.
My thoughts so far are
- yes NNDR is a high cost for businesses, but as the demand for local services isn't going away, it will remain important, both politically and financially.
- I had thought the review of business rates was going to consider issues like trying to get parity between internet shops and high street shops. These measures don't strike me as any sort of review: more of a slight tweak
- councils have been "enjoying" 50% risk/ reward in nndr since 2013 (the other half still goes to Whitehall). There was a compensating drop in other funding, so this won't be a windfall
- crucially though, any growth in rated can easily be offset, or outweighed by the impact of appeals ( ie businesses challenging their bill via the independent VOA). Many councils are now facing severe pressures due to this. I believe the council with selafield in their list got royally turned over when 5 years worth of backdated rates had to be paid back from their relatively small general fund
- now, at present councils only face half this risk. Ramping this up to 100% makes the annual budget process a lot more precarious
- It brings about the risk of "begger the neighbour" type policies. Some councils are just richer than others (call it luck if you like, but its usually down to population mix and economic strength). A wealthy council can cut rates and hoover up masses of business park / retail park footage, leaving less lucky councils floundering (and typically there are the ones with the most demand to meet/ less reserves to help out). I don't think this type of approach will fit well with the local authority ethos, as there is often a lot of cross working between councils ( more than between, say Asda and Tescos)
- Finally, and the biggie - it ignores any link between funding and need. In fact, it doesn't ignore it, it tears the head off it and then tramples on its still warm body. Councils have statutory duties placed on them, and there are national expectations around levels of care ( ie how many times your disabled Nan gets helped to the bathroom, the quality and frequency of highway repairs etc). Plus non statutory expectations around street cleaning, access to parks, libraries and so on.
The national funding system (which was never perfect I admit) had disadvantages, and there is a lot to be said for giving councils an incentive to grow the local economy.
But breaking this link between funding and need is going to stretch the current political system pretty hard. I'm sure its coincidence that many of the councils losing are northern unitaries, and many gaining are southern boroughs and shires (the new homes bonus has also been responsible for shifting resources from up north (England) to down south.
From a work point of view this has been good for where I work, but on a personal level, this is just another problem with an economy totally focused on London / SE.
Ps I don't think market forces will be able to equalise this issue over time, because we're talking about the delivery of public services that the market can't by definition provide.
Ian
I'm not sure how the Selafield council will have got raped. UBR while collected by local authority is nearly all returned to Central Government, who then award a grant to the Local Authority whereas Council Tax is collected and spent locally.So I have a lot of interest in how this policy plays out.
My thoughts so far are
- yes NNDR is a high cost for businesses, but as the demand for local services isn't going away, it will remain important, both politically and financially.
- I had thought the review of business rates was going to consider issues like trying to get parity between internet shops and high street shops. These measures don't strike me as any sort of review: more of a slight tweak
- councils have been "enjoying" 50% risk/ reward in nndr since 2013 (the other half still goes to Whitehall). There was a compensating drop in other funding, so this won't be a windfall
- crucially though, any growth in rated can easily be offset, or outweighed by the impact of appeals ( ie businesses challenging their bill via the independent VOA). Many councils are now facing severe pressures due to this. I believe the council with selafield in their list got royally turned over when 5 years worth of backdated rates had to be paid back from their relatively small general fund
- now, at present councils only face half this risk. Ramping this up to 100% makes the annual budget process a lot more precarious
- It brings about the risk of "begger the neighbour" type policies. Some councils are just richer than others (call it luck if you like, but its usually down to population mix and economic strength). A wealthy council can cut rates and hoover up masses of business park / retail park footage, leaving less lucky councils floundering (and typically there are the ones with the most demand to meet/ less reserves to help out). I don't think this type of approach will fit well with the local authority ethos, as there is often a lot of cross working between councils ( more than between, say Asda and Tescos)
- Finally, and the biggie - it ignores any link between funding and need. In fact, it doesn't ignore it, it tears the head off it and then tramples on its still warm body. Councils have statutory duties placed on them, and there are national expectations around levels of care ( ie how many times your disabled Nan gets helped to the bathroom, the quality and frequency of highway repairs etc). Plus non statutory expectations around street cleaning, access to parks, libraries and so on.
The national funding system (which was never perfect I admit) had disadvantages, and there is a lot to be said for giving councils an incentive to grow the local economy.
But breaking this link between funding and need is going to stretch the current political system pretty hard. I'm sure its coincidence that many of the councils losing are northern unitaries, and many gaining are southern boroughs and shires (the new homes bonus has also been responsible for shifting resources from up north (England) to down south.
From a work point of view this has been good for where I work, but on a personal level, this is just another problem with an economy totally focused on London / SE.
Ps I don't think market forces will be able to equalise this issue over time, because we're talking about the delivery of public services that the market can't by definition provide.
Ian
Edited by Ian Geary on Tuesday 6th October 18:33
The only time I've seen a Local Authority cry (and they really tried to avoid paying out) is where a hotel had some residential living accommodation that was included within their trading figures and separately assessed for Council Tax so therefore double counted. They came out of the Council Tax list back dated for about 13 years....
RanchoGrande said:
My rates bill comes to just shy of £80k pa, which is for 3 small retail stores. It's staggering the amount raised via business rates and the majority of the public have never even heard of business rates nor understand how it's calculated.
My rates bills have increased year on year and I highly doubt they'll ever decrease. It's so out of touch and is directly responsible for the demise of many high Street retail stores as so many are stuck with out of date rateable values. Trouble is, if rates do go down rents will only increase...
Are you not in receipt of retail relief?My rates bills have increased year on year and I highly doubt they'll ever decrease. It's so out of touch and is directly responsible for the demise of many high Street retail stores as so many are stuck with out of date rateable values. Trouble is, if rates do go down rents will only increase...
We often hear how some big businesses avoid paying corporation tax in the UK but I'm sure that most of them pay significant amounts in business rates, High Street coffee shops especially. I was talking to the owner of an old fashioned, sell everything from nuts and bolts to kettles, shop recently, it barely makes a profit and is only still in business because the owner is in his 80s and has nothing better to do, but his rates bill is over £100k per annum. Granted it's a big shop, but £100k for a business that barely breaks even is a huge burden, and if the shop closes it will never reopen, there are plenty of charity shops on the street already.
RYH64E said:
We often hear how some big businesses avoid paying corporation tax in the UK but I'm sure that most of them pay significant amounts in business rates, High Street coffee shops especially. I was talking to the owner of an old fashioned, sell everything from nuts and bolts to kettles, shop recently, it barely makes a profit and is only still in business because the owner is in his 80s and has nothing better to do, but his rates bill is over £100k per annum. Granted it's a big shop, but £100k for a business that barely breaks even is a huge burden, and if the shop closes it will never reopen, there are plenty of charity shops on the street already.
If he closes it he get's 3 months off rates, then back the full liability. But with no income.It's very very hard to relet these big units. Essentially someone has to find the money to split them up.
RYH64E said:
We often hear how some big businesses avoid paying corporation tax in the UK but I'm sure that most of them pay significant amounts in business rates, High Street coffee shops especially. I was talking to the owner of an old fashioned, sell everything from nuts and bolts to kettles, shop recently, it barely makes a profit and is only still in business because the owner is in his 80s and has nothing better to do, but his rates bill is over £100k per annum. Granted it's a big shop, but £100k for a business that barely breaks even is a huge burden, and if the shop closes it will never reopen, there are plenty of charity shops on the street already.
This is why I never really backed the starbucks witch hunt as the amount of business rates they must pay in the UK will be huge. As for stores closing, this has been happening up and down the country for best part of a decade as independent business feel the pinch of online retail. I went to Seaton Devon earlier in the year and was amazed by the amount of really old fashioned independent stores - like watch shops, shoe shops etc all seemingly run by old folk. Once these business owners move on they will close and either be turned into charity shops or just left to rot.Shotgun Jon said:
I'd respectfully suggest you speak to your Billing Authority.
Obviously being a dribbling thick old lazy idiot working in Local Government I wouldn't know.
Interesting, will take a look in to this. Only applicable for properties with a rateable value of less than £50k so I think 2 out of the 3 shops will qualify. Obviously being a dribbling thick old lazy idiot working in Local Government I wouldn't know.
Thanks for the tip!
Edited by RanchoGrande on Wednesday 7th October 12:16
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