Measures ‘not enough’ to rescue high streets

The Advertiser Series: MISSED OPPORTUNITY: The Chancellor of the Exchequer, George Osborne, delivers his Autumn Statement to MPs in the House of Commons MISSED OPPORTUNITY: The Chancellor of the Exchequer, George Osborne, delivers his Autumn Statement to MPs in the House of Commons

GEORGE Osborne came under attack last night for failing to go far enough in his attempt to rescue the region’s high streets.

Among the measures announced in the Autumn Statement were a two per cent cap on the retail price index increase to business rates.

This will benefit 52,000 business premises across the North-East – the remaining 19,000 properties will pay no rates at all.

In addition, a £1,000 business rates discount – available for two years to shops, pubs and restaurants worth less than £50,000 – will benefit 14,000 properties in the North- East, the Government said.

Small firms across the region labelled the policies as a missed opportunity for falling short of the system overhaul many had called for, to give small traders a fighting change of competing with large national chains.

Amanda Vigar, managing partner of V&A Vigar (Darlington), said: “Small and medium-sized businesses are the very lifeblood of our economy and creating the environment, or the ‘land of opportunity’ as Cameron has put it, to support them, is absolutely vital to our continued recovery.

“Our high streets are still having a bad time of it and action is needed now, not tomorrow, to re-evaluate business rates.

‘‘The problem is that the tax is based on rental values, which are recalculated every five years, meaning that retailers are still paying rates that were set in 2008, before rents took a nosedive in most places.

‘‘To make matters worse, the next revaluation has been pushed back from 2015 to 2017.

‘‘This scandalously means that businesses in areas where rents have fallen are paying much higher rates than they should, while those in hotspots where rents have risen have benefited.

“This has resulted in the ridiculous situation where retailers in Middlesbrough are almost subsidising better off luxury jewellers and boutique shops on London’s Bond and Sloane Streets.

“Wealthy retailers are, in effect, being given a nice, juicy windfall by the Coalition’s unwillingness to act on this issue.

‘‘So, while the rates cap is good news for small businesses in that rates are not now set to rise in line with inflation, the Autumn Statement presented a valuable opportunity to announce an early revaluation, which the Government has now sadly missed.”

Mr Osborne’s announcement came as the rental chain Blockbuster announced the closure of a further 62 shops, with the loss of 427 jobs, and ahead of tomorrow’s Small Business Saturday, a national campaign to boost sales in local shops.

Ted Salmon, of the Federation of Small Businesses, welcomed the measures.

He said: “Relaxing business rates for those firms that want to expand and incentivising new businesses into empty properties on the high street will boost retail and town centres.

‘‘Retailers on struggling high streets will be especially heartened by the additional £1,000 relief.

“The commitment to clearing the appeals backlog and reviewing the system is a major step forward.

‘‘What remains outstanding is a fundamental reform of business rates, which we will continue to press for.”

Bill MacLeod, incoming senior partner at PwC, in Newcastle, said: “The new 50 per cent ‘reoccupation’ relief for small businesses on the high street could reduce the number of vacant shops, but has the potential to be unfair to existing businesses who may struggle to pay full rates. Unless it is managed properly, unintended consequences are inevitable, with small businesses just moving shops to take advantage of the relief, creating a merry-go-round of rate relief relocations,” he said.

“The announcement that small business rate relief will continue is, in reality, only maintenance of the status quo.

‘‘The so-called extension and enhancement of this scheme has now gone on for so long that it is embedded in the rating system.

‘‘Small businesses rely on it and it would be very difficult to withdraw, economically and politically.”

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