The Chancellor’s new package of support on business rates has been welcomed by UK businesses but hospitality groups have stressed that it does not go far enough to fix the “outdated” system.
Jeremy Hunt unveiled new measures to help businesses and shops that he said will be worth £13.6 billion in total.
The steps include freezing the business rates multiplier for another year to protect businesses from rising inflation, meaning that rates will no longer be hiked up in line with double-digit consumer prices inflation (CPI) from next April.
This measure alone is expected to save companies £9.3 billion over the next five years.
The Treasury also pledged to increase rates relief for retail, hospitality and leisure firms from 50% to 75% for 2023 to 2024.
While the relief is capped at £110,000 per businesses, the Government said that around 230,000 business properties are set to get a £2.1 billion tax cut next year.
Furthermore, many high-street retailers who have seen the value of their property rents tumble in recent years will benefit from a move to revalue business rates.
The Government said it would be removing the downwards cap – meaning businesses who see falling business rates bills as a result of revaluation will benefit from the decrease straight away.
Businesses are struggling with prices rising and growing uncertainty.
— HM Treasury (@hmtreasury) November 17, 2022
Robert Hayton, the UK president of real estate adviser Altus Group, praised the autumn statement as a “budget for the embattled high street” that has listened to and acted upon the concerns voiced by retailers.
He said: “This is a budget for the embattled high street where rents have been in decline for a number of years.
“Next April will now level up regions and sectors which have fared badly whilst protecting those against exceptionally large increases in tax liabilities.
“The next part of the puzzle could come as early next week with the publication of new draft rateable values and then businesses will know exactly their rates bills for next year.”
Total business rates paid by the retail sector is estimated to fall by a fifth, the Government said.
The British Retail Consortium (BRC) – which works with more than 5,000 business members – also welcomed the new measures, which will prevent many retailers from overpaying rates bills.
The BRC’s chief executive, Helen Dickinson, said: “The announcements today show the Government has heard the concerns of the retail industry.
“This autumn statement supports retailers by reducing upwards pressure on prices in the short term, and helping retailers protect jobs, keep shops open, and protect the vibrancy of local communities.”
While industry groups welcomed the package of support, some urged the Government to consider deeper, structural change to the business rates system as many businesses face crippling costs during the winter.
Emma McClarkin, the chief executive of the British Beer and Pub Association, said: “It is right the Chancellor has acknowledged the need for changes to our business rates system and we welcome the extended and increased relief to 75% for pubs, so they do not continue to be penalised through unfair taxation.
“Urgent root and branch reform is still needed make business rates fit for the 21st century. (With) the decision not to introduce an online sales tax it seems the Government doesn’t recognise the completely archaic nature of the current system.”
She added that pubs and brewers face a “hurricane of costs” and that the lack of further relief for the sector will have a massive effect on their survival.
Trade body UKHospitality echoed Ms McClarkin’s concerns, pointing out that the Chancellor did not address the fact that a big proportion of the sector may not survive the winter.
Its chief executive, Kate Nicholls, said: “I’m pleased that the Chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a freeze in the multiplier, extended reliefs and no downward transition.
“However, it remains the case that the current system is outdated and not fit for purpose.
“The Government made a manifesto commitment of root and branch review and it’s essential that this is delivered as soon as possible.”