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Business rate rise complaints misdirected

The changes in the business rate have attracted the ire of the Confederation of British Industry and the Federation of Small Businesses. Part of the trouble, not mentioned by the complainers, is due to the deferral of UBR valuations when George Osborne was Chancellor. However, the CBI and FSB are doing their members no favours by complaining about the UBR in isolation. It is total occupation costs that count ie rents + rates. The relentless rise in rents is at least as much of an issue.

Alone of all taxes, the UBR takes account of locational advantage. It is the only tax which recognises that trading conditions in London’s Oxford Street are better than in run-down stretch of Oxford Road, Manchester. There is also a substantial body of research which shows that where the business property tax has been reduced – as in the 1980s Enterprise Zones, all the benefits were captured in rents. Business got nothing.

  • The FSB ought to be promoting the interests of its rent-paying members by campaigning for the abolition of the iniquitous but universal upwards-only rent revision clause.
  • The CBI should be promoting the interests of its members by campaigning for valuations to be based on site values only, since the present system penalises owners of industrial plant on sites of low land value, such as chemical manufacture, oil refining, power stations, etc, which are over-charged under the present system of valuation.

It is astonishing how these trade bodies fail to campaign for policies which would be of obvious benefit for their members, whilst arguing for policies which would do their members little or no good at all in the long run. Business owners should ask themselves what they are getting for their considerable membership fees.