Devolution of business rates is welcome, but it’s still just tinkering at the edges, says NHBF

The National Hairdressers’ Federation has given a cautious welcome to chancellor George Osborne’s plans to give councils greater powers to set and collect business rates, but has warned wider reform is still needed.

The chancellor recently set out plans to allow councils to keep the £26bn they raise from business rates rather than it going to Whitehall.

Councils will be able to cut rates if they think it will help to encourage new firms to their regions, while councils with elected mayors will be able to raise rates, as long as the extra money is used to fund local infrastructure projects and local firms agree.

NHBF president Paul Curry said these changes had the potential to benefit local high streets. “It is only right local councils – who know their area best – get more control over the appropriate level for business rates in a region and how that money is spent. Councils may cut rates to help kick-start local growth and investment, which would be welcome news. But even if rates increase, if businesses can see how they’ll benefit at local level, that takes some of the pain away.”

However, in the light of recent research by the Property Industry Alliance which shows that business rates are a growing burden on businesses compared to the rent charged by UK landlords, NHBF chief executive Hilary Hall said, “These reforms are still just tinkering at the edges of a broken system. The NHBF has long argued that competition from out-of-town and online retailers means a system based on the value of physical premises is outdated and urgently needs to change. We would like to see real progress on this when the outcome of the government’s review of rates is announced next spring.

On top of this, these reforms won’t in themselves help small businesses. Many small businesses benefit from Small Business Rate Relief. But this relief remains in the ‘gift’ of the chancellor – to be renewed or scrapped as he wishes. Making Small Business Rate Relief permanent would be a clear commitment by the government to our high streets.”