Pubs with high business rates hit as Government postpones revaluations

17-Oct-2012 - Last updated on 19-Oct-2012 at 14:21 GMT

Brandon Lewis: Business rates revaluation is set to be pushed back by two years

Licensees will have to pay their current business rates for an extra two years as the Government has announced that it is to postpone the next business rates revaluation in England to 2017.

Parliamentary under secretary of state for the Department for Communities and Local Government Brandon Lewis, who is also the pubs minister, explained that this will avoid any unexpected hikes for businesses.

He said: “Business rates are the third biggest outgoing for local firms after rent and staff costs. This decision will avoid local firms and local shops facing unexpected hikes in their business rate bills over the next five years. As business rates are linked to inflation, there will be no real terms increase in rates over this period. This reform will provide certainty for businesses to plan and invest, supporting local economic growth.”

The move has caused outrage among ratings agents. John Webber, head of rating at Colliers international said: “The Government is trying to position delaying a revaluation of business rates as a bonus for businesses – the opposite couldn’t be more true.

“Many businesses and retailers in hard pressed areas of the country have been eagerly awaiting the five yearly revaluation, due to happen next year. Current business rates are based on 2008 rental values, which are much higher than current figures.

“Instead of looking to increase the term of a five yearly revaluation the Government should look to shorter revaluation cycles, to ensure that businesses are paying fair and relevant business rates.”

Michael Yass, director of Chesterton Humberts, added: “A drop in rateable values could mean a potential reduction in tax income for the Government.

“However, on a positive note, historically valuation dates for the lists have not been in line with the state of the economy. By shifting the date back by two years, it will mean that, going forward, it is more likely that there will a more consistent valuation.”

Jerry Schurder, head of rating at Gerald Eve, said: “This is awful news ... it is preposterous to claim that this provides any real benefit to businesses.

"Today’s announcement simply creates a toxic cocktail which is going to be very hard for thousands of businesses to swallow and survive," added Mark Rigby, chief executive of business rates firm CVS.

“No business could get away with charging prices that are so many years out of date. Struggling firms shouldn’t have to take it from the government, yet they are being required to do so.”

Brigid Simmonds, chief executive of the British Beer & Pub Association, said: “This will come as bad news for many pubs, which were relying on the revaluation to reduce business rates because their turnover had dropped. The revaluation is an opportunity to get a fairer rates bill, so any delay is very unwelcome."

The British Property Federation labelled the decision a “further blow to the country’s struggling high streets”.