Earlier this week the British Retail Consortium (?BRC?) published figures to confirm that retail sales fell in December by 3.3%, with the value of like for like sales being at their lowest level since 1994. These are just the latest figures released detailing the falling sales experienced by retailers which have contributed to the closure of established high street names such as Woolworths and job losses across the sector. 2008 has been a gloomy year with the outlook for 2009 not much better. The BRC have forecast that as many as 40,000 retail workers are likely to lose their jobs over the next few months with redundancies at Marks and Spencer, Land of Leather and the Celebrations Group being just the start. Difficult times are ahead for all of us in the next 12 months and it would seem that businesses are to be dealt a further blow in 2010.
On Monday the Business Rate Supplements Bill (?the Bill?) had its second reading in parliament. The Bill, which is intended to be in force in April 2010, gives local authorities the power to charge businesses with a rateable value of ?50,000 or more, a supplementary business rate. This supplementary business rate (to be known as the Business Rate Supplement (?BRS?)), will be fixed at 2% and charged in addition to the national business rate (currently set at 46.2% of rateable value). The purpose of the BRS is to fund ?expenditure on a project that the authority is satisfied will promote economic development in its area?. It has already been reported that the introduction of the BRS is crucial to the success of the proposed new east-west rail link in London ? Crossrail, where it is hoped that the BRS will cover a third of the cost.
The Bill confirms that before imposing the BRS the authority is to issue a prospectus providing details as to the scheme for which the BRS is being imposed. The authority is then required to undergo a consultation process with ratepayers and make any adjustments it thinks necessary after such consultation. Even though the Government said in the 2007 Budget that the BRS needed to be ?subject to credible accountability to ratepayers and real protection for business..?, the ratepayer is not going to be in a position to have a say as to whether the BRS is imposed unless the BRS is to fund more than one third of the projected expenditure of the scheme intended. In those circumstances a ballot will be held.
The Bill further confirms that the resources raised from a BRS can not be used to fund services that the authority is already under an obligation to provide such as education, housing etc. In spite of this however, there is a general fear that the measure will be used by local authorities to extract additional revenue rather than to fund projects.
The Bill has met with general resistance from the business community as a whole however, it is the retail sector that is likely to bear the brunt of it. The sector is highly dependant on property and requires more land per a pound earned than the majority of other businesses. Retailers already pay 25% of business rates and are suffering with inflated related rises and the loss of empty property relief.
In the current market when the Government are prioritising legislation in order to focus on the economic crisis one would have thought that this legislation would have been put on a back burner however, this does not seem to be the case. Kevin Hoctor of the British Chamber of Commerce has said ?This would be wrong in good times, but in this bleak economic period it?s absolutely unacceptable?. It remains to be seen whether the Government listen to the campaign against the enactment of the Bill.
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