WeAreWaterloo Blog: CEO, Ben Stephenson discusses the impact of the business rates revaluation
The VOA has published a relatively accurate summary of what every business in the country will be paying (click on the link here), but a number of our members haven’t checked yet.
The BID’s first briefing of the year was held in WeAreWaterloo’s new space, Build Studios, which will operate as an affordable office for businesses in the built environment sector, to help with the increasingly high costs of running a business in London. We did this because we believe that there is a real danger that our city centres will all begin to look the same in a few years, with only chains and large offices able to afford to set up here.
For high streets like Lower Marsh and The Cut, for smaller parades of shops like London Road and Kennington Road, for the young businesses on Valentine Place and the offices in the railway arches across the area – rising business rates, the increasing cost of labour and Brexit could all spell real trouble. And if these businesses go, so too, to a certain extent, does the character of the area, local supply chain, and the long-term investment of many hard working people.
Since the revaluation was announced, the BID has been attempting to assess the impact on members. We have also been involved in a London-wide campaign which has been lobbying the government to think again on business rates – how valuations are carried out, the intrinsic skewing of the rates system in favour of internet-based businesses, the disproportionate impact on London, and so on.
And we are running a survey to ask what the effect will be on our members. Of our members that have checked and do know what they’ll be paying, 21% have said that the revaluation will negatively impact their businesses, while a surprising 29% said it won’t. 37% of the respondents said they wouldn’t change the way they operated as a result of the revaluation.
Where new rateable values are in many cases doubling business rates over the next five years, we wonder whether businesses have fully appreciated what’s coming on 1st April and if not, whether the communication has been adequate. In some cases, members are being explicit that rising rates costs will be passed on to customers, so we might see a price rise in the months to come. Others are more resigned than sanguine – they can’t move and they can’t challenge the assessment, so they struggle to know what to do.
Indeed, as the guest speaker at the briefing Jerry Schurder, Head of Business Rates at Gerald Eve points out, the new ‘check, challenge and appeal system’, aimed at reducing the number of speculative rates appeals (and therefore the backlog), is eliciting objections among many in the industry.
The new process will take up to three years, and, while businesses will have to provide endless complex calculations where they challenge the official valuation, the VOA is not obliged to show how they valued the property in the first place.
This seems counterproductive, since businesses would be far less likely to challenge the valuations if they could see whether or not the officials got their assumptions wrong. What better way to reduce speculative appeals? The sting in the tail of the appeals process is that if the official valuation is found to have been within a broad margin of error, a tribunal will rule it to have been reasonable and businesses won’t receive a refund in any case.
In Waterloo, where all but seventeen rateable values have gone up, in one case by as much as 540%, we think it’s necessary for businesses to be able to efficiently challenge the valuation. We also call on local authorities and the government to communicate extensively with businesses about the rise. Lambeth and Southwark are Labour-run authorities, and their communication needs to be matter-of-fact rather than political in motivation or there’s a danger businesses won’t read it.
Finally, alongside a fundamental rethink of the business rates system by the Government, might the boroughs consider where they can introduce discretionary reliefs for certain types of businesses, or businesses in growth areas?