The CBI, along with 41 trade associations spanning the UK economy, have issued a joint statement urging the chancellor Rishi Sunak to reform the business rates system and “unleash a wave of business investment across key government priorities, including net zero and levelling up”.
The joint statement from businesses is backed by 41 trade associations including British Retail Consortium, UK Hospitality and SMMT, representing around 261,000 businesses and nine million employees.
The groups argue that now the government has confirmed that policy announcements as part of the long-awaited reform of the business rates system will be made this autumn, firms “need to see fundamental reform of the system to address long-standing barriers to investment”.
They added that the current system “hasn’t kept pace with the challenges and opportunities we face as a country” and that while no business is solely against paying into the tax system, in their current form, the business rates system is “uncompetitive, unproductive and unfair”.
As such, the letter outlines a number of key changes it would like to see the chancellor make including:
- Reduce the overall burden of the business rates system to unlock business investment in net zero and support levelling-up by allowing business rates liabilities to fall in line with property value
- Increase the frequency of business rates revaluations and ensure rates adjust quickly to economic changes to ensure business rates reflect firms’ ability to pay
- Create a ‘Greener’ business rates system to support the government’s net zero ambition
Rain Newton-Smith, CBI chief economist, said: “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.”
He added: “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.”
The full letter can be read here.