Memorandum by the Rating Surveyors' Association
(SRB 7)
I am pleased to respond on behalf of the Rating
Surveyors' Association to the call for evidence in respect of
this matter. The Rating Surveyors' Association is a professional
organisation representing the interests of experienced Chartered
Surveyors who specialise in the field of business rates. The Association
was founded in 1909 and has over 400 members drawn from private
practice, corporate bodies, the Valuation Office Agency and local
authorities.
Our primary function is to work with the various
bodies responsible for the rating system—the Department
for Communities and Local Government, the Valuation Office Agency,
local authorities and the Valuation Tribunal Service—to
improve the business rates system. We actively pursue this objective,
keep our members up to date on relevant issues, encourage their
participation on all aspects of our work, and organise social
events to bond people of like minds.
We consider that the RSA is especially qualified
to comment on the proposed supplementary business rate given our
specialist knowledge of the non-domestic rating system, of the
impact of business rates on the property market and our involvement
with business organisations upon whom the additional rate would
be levied.
The RSA has been a fervent supporter of the
Uniform Business Rate since rates were "nationalised"
in 1990. The UBR ensured a "level playing field" so
that the cost of rates to business was dependent upon a property's
value and was not distorted by political decisions taken by local
authorities. Of increasing importance over the last few years,
given the requirement for businesses to budget accurately for
future outgoings, has been the linkage of the UBR to the Retail
Prices Index (albeit that it is rebased at each five-yearly revaluation
to ensure that the total take from non-domestic rates increases
in line with inflation). This has brought certainty, stability
and predictability to this important outgoing.
Sir Michael Lyons recognised these benefits
in his recently published report into local government and his
recommendation 8.1 was "The RPI cap on the national level
of business rates should be retained". We were therefore
surprised that Sir Michael called for the introduction of a supplementary
local rate as this will remove businesses ability to predict and
budget for their future outgoings and add significantly to the
administrative burden in managing their rates outgoings. This
is especially pertinent for the large number of multi-site operators
with rateable properties located throughout the country.
The Committee will be aware that as recently
as December 2001, following consultation, this Government rejected
its own plans for a supplementary local rate. In a White Paper
(Strong local leadership—quality public services
Department for Transport, Local Government and the Regions) Government
abandoned its plans for a local rate supplement because "it
is clear from many of the local authority responses that the supplementary
rate was seen primarily as a means of raising revenue," and
"business organisations pointed out that the only way in
which local businesses could be sure a supplementary rate would
not be imposed on them was to vote against."
Sir Michael recommended that businesses should
not be invited to vote in respect of the supplementary local rate
he favours and instead recommends designing the proposal "in
a way that can gain credibility with business". It seems
to us that it is the power of a vote and the fact that Business
Improvement Districts levies are applied to very targeted localities
which has given BIDS their credibility. Lyons' call for local
businesses to be given a "strong voice in the final decision
on whether there should be a supplement, and the purpose to which
the proceeds are put" is a poor substitute for a vote. He
suggests that only higher tier authorities should be able to levy
a supplementary rate, but the supplement would therefore be a
crude tool and unlikely to receive support other than from those
businesses that would benefit directly from use of the additional
revenue collected.
We have no doubt that if supplementary local
rates are introduced and levied, this would lead to the abandonment
of BIDS as businesses would not countenance paying for both. This
would be regrettable as considerable endeavours have been made
in establishing the regulatory framework for BIDS and establishing
what is now a critical masse of successful BIDS, albeit there
is room for many more. Because of the dual key voting mechanism
and the early signs of success in delivery, BIDS are gaining the
support of business which would be lost should supplementary local
rates be introduced.
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