The government’s pledge to carry out a radical review of the business rates system has been plunged into doubt, as a Freedom of Information investigation reveals its valuation agency is set to spend £26m this year on a revaluation exercise based on the current rates regime.

Chancellor George Osborne promised a full “structural review” of the rates system in last year’s Autumn Statement but with a month to go until the next Statement - in which he had been expected to announce radical changes - new data suggests the Valuation Office Agency (VOA) expects it to be business as usual until at least 2017.

An FOI request submitted by business rates expert Paul Turner-Mitchell - and shared exclusively with The Grocer - reveals the VOA is working on a longstanding revaluation of properties. In its response to Turner-Mitchell, the VOA said it had already revalued 446,000 of the 1.8 million properties in England, and expected this work in 2015-16 to cost the government a whopping £26m. “The government’s structural review of business rates has had no effect on the revaluation for 2017,” it said.

Turner-Mitchell claimed the fact so much money was being spent on revaluating properties based on current rates suggested the government was not serious about reforming the rates system. “Effectively what this means is that either the government isn’t serious at all about reviewing the rates system, or alternatively it is throwing £26m down the drain on a defunct system,” he said.

“I wanted to see meaningful review and change for business rates,” Turner-Mitchell added. “The end of unfair transitional relief. Removing the smallest of properties completely out of business rates. More frequent revaluations. This list goes on. Is there a desire for this now?”


Rising concern


The results of the FOI release come amid growing fears from industry leaders that the government might backtrack on its promise of fundamental business rates reform.

On Saturday, The Daily Telegraph revealed the British Retail Consortium, the CBI, Federation of Small Businesses and the Association of Convenience Stores had joined forces to try to stop the government from using plans to devolve rates power to local councils as an excuse for a u-turn on its commitment to reform. Osborne revealed earlier this month that local councils would be handed full control of business rates.

One industry leader told The Grocer: “The fear is that the government is using devolution as an excuse to bury the review and pass the buck on to local councils.”

A spokesman for the BRC, which previously campaigned for an entirely new system of tax, said it had now accepted the government planned to stick with a property-based tax but warned the burden facing retailers had to be rebalanced. “This 2017 revaluation is expected to result in yet another increase on business rates. The tax is outmoded and discourages investment and growth. In 1990 business rates were about a third of annual rent whereas it will soon be more than half if the government doesn’t act and announce fundamental reform. We have asked government to freeze the business rates level, lower the multiplier closer to the 1990 level, conduct more frequent revaluations, remove the smallest hereditaments and roll forward existing small business and high street relief.”

In September, leading supermarkets wrote to Osborne warning unless rates were cut it would prejudice their ability to afford costs such as the national minimum wage.

Earlier this month Tesco CEO Dave Lewis said that its rates bill had soared by up to 40% in the past three years.

Figures previously revealed by The Grocer show that since April this year supermarkets have been paying on average a massive £700,000 a year per supermarket, despite government pledges to reduce the burden on the sector.

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