It’s time to demand a revolution
THERE comes a moment when we have to give up on reform and demand revolution. It isn’t something that Agromenes normally proposes, but Phillip Hammond’s first Spring Budget is the last straw. Alloting £300 million to a hardship fund for those hit by Business Rate hikes and a special deal for pubs is simply sticking plaster for a system that is clearly bleeding to death.
Business Rates are no longer a sensible way to raise money for local purposes. They were originally designed to ensure that those who made money in a community should be levied for the services that were locally provided. Locally set, locally levied and locally spent: it was a logical and wholly defensible system. Regular and independent uprating was the way in which the burden was shared and the rateable value did provide some reasonable surrogate for ability to pay.
On a practical level, none of these conditions now obtain. The Business Rates are largely fixed by national regulation, largely collected for the Treasury and largely distributed according to a national formula. In general, all businesses put money into a pot, have no control over where it goes and are subject to rating revaluations that result in huge winners and losers on a basis that is at best opaque and, at worst, utterly incomprehensible.
It’s a bad deal for all those who are caught by the requirements, but what makes it worse is that the deal loads on businesses costs that are not borne by their competitors. The local shopkeeper pays his rates, but his mail-order competitor doesn’t, yet every mail-order house benefits from law and order, trading standards, education and roads, all of which are provided, at least in part, from the Business Rates.
Retail traders in cities and market towns are struggling to compete. That excellent chain John Lewis, owned and operated by its staff, has had to cut dramatically this year’s payout to its partners, so difficult has trading become. All over the country, in great cities as well as small villages, pubs, garages and shops are closing, their demise hastened by the Business Rate system. No one wants people to be favoured simply on grounds of tradition, but this is about fairness. We all should be angry when some are charged, but others get away with paying practically nothing.
Such a situation is the antithesis of a free market. Shackling one group while advantaging its competitors should be wholly unacceptable to a Tory chancellor, yet Mr Hammond’s Budget only talked of general consultation on Business Rates and there is no hint that he’s envisaging the necessary revolution. Country people, in particular, should be concerned at this. The present system is damaging everywhere, but it’s particularly destructive in rural areas, where there are already so many other factors that undermine the ability of businesses to survive.
Property should no longer be the basis upon which local taxes are levied. The burden of paying for services should be placed on sales. Whether we take Brexit as an opportunity to impose additional VAT or to institute a simple service sales tax, the key factor is to ensure that the new arrangements are fair to all.
There would be no Business Rates, but the equivalent total would be raised on everything you buy, whether by mail-order or from the local supermarket. Small businesses and start-ups would be exempt in order to maintain rural services and encourage the entrepreneur, but, otherwise, there would be a level playing field, demanding no complex revaluations. This concept may be revolutionary, but its time has come.
‘The burden of paying for services should be placed on sales