Ahead of COP26, the UN Climate Change Conference in November, employers representing around 261,000 UK businesses and nine million employees say business rate reform is essential for green investment.
The CBI and 41 trade associations spanning the UK economy have issued a joint statement outlining how action by the Chancellor at the next Budget to reform the current business rates system could unleash a wave of business investment across key government priorities, including net zero and levelling up.
Presently, in England, the existing “outdated and outmoded business rate regime acts as a drag on the government’s goal of a high wage, high productivity and high investment economy”.
The statement argues that with up to 50 per cent of business investment potentially subject to business rates, the current system actively disincentivises business investment in decarbonisation and wider investments which can improve all-important productivity, which is the only sustainable route to higher wages.
The joint statement from businesses is backed by 41 trade associations including the British Retail Consortium, UK Hospitality and SMMT.
Rain Newton-Smith, the CBI’s Chief Economist, says: “Action to get investment flowing into and around the UK is sorely needed to reinforce our recovery. The Government deserves credit for convening the supply chain advisory group to unblock temporary challenges, but as we’re seeing with energy prices, there is no substitute for longer-term planning and investment.
“The Chancellor has an opportunity to fix this, starting with fundamental business rates reform at the Budget and Comprehensive Spending Review. By setting out an approach which attracts investment, he can equip the UK with the tools it needs to secure the high wage, high productivity and high skill economy of the future.
“With up to half of business investment potentially subject to business rates, it has literally become a tax on investment. Action to stimulate investment, starting with business rates reform, unites firms spanning the whole economy. If the Government is serious about achieving its net zero ambitions, kicking reforms further into the long grass cannot be the answer.”
Helen Dickinson OBE, Chief Executive of the British Retail Consortium, commented:“Sky-high business rates are closing stores up and down the country and preventing new ones from opening. A recent BRC survey found that four in five retailers will be forced to close shops unless the rates burden falls following the Government’s upcoming Fundamental Review. Without change, the areas most in need of levelling will be hit hardest, and the Government’s levelling-up agenda will fail. The choice is clear – cut rates and boost investment and jobs, or leave them unchanged and see more shops closed and jobs lost.”
“The business rates system is undermining town centre recovery and poses a significant risk to the future of our high-street businesses,” says Melanie Leech, Chief Executive, British Property Federation. “Business rates have become so unaffordable, they are now hampering town centres’ ability to adapt, modernise and thrive. Fundamental business rates reform will unlock much-needed investment for businesses, town centre regeneration and the nation’s net zero ambitions – the Government cannot afford to waste this opportunity.”