CBI urges business rate rise cap
Chancellor George Osborne should cap business rate rises at 2% next year and offer one-year rate holidays for firms moving into vacant sites to boost the recovery, the CBI says.
In its submission to the Chancellor ahead of his Autumn Statement, it argues the system is outmoded and acts as a barrier to much-needed investment.
Business rates normally rise in line with Retail Prices Index inflation as it stands in the previous September.
This year it was recorded at 3.2%, but the CBI wants the rate rise to be capped for next year pending a full reform of the tax. It has calculated this cap will cost the Treasury £327 million for 2014/15.
The call comes as official figures show retail sales down, the construction sector stuttering and a record goods trade deficit with the EU - despite signs of burgeoning growth in the wider economy.
CBI director general John Cridland said business investment was needed to create jobs, raise living standards and drive the recovery.
He said: "At the heart of our realistic package of measures for the Chancellor is an overhaul of the business rates system, which will boost the high street, manufacturers and factories. We want to ensure windows are opened up, not boarded up."
The CBI argues the business rates system is uncompetitive - raising higher revenue as a proportion of gross domestic product than other developed countries- as well as "distortive" as it hits bricks and mortar rather than web-based firms, and too complex.
It says a short-term rates cap would help firms that have been struggling with high rates and should serve as a commitment that the Government is willing to take steps to reform the "damaging" system.
In its submission, the CBI adds: "Government should also consider introducing an incentive to move into vacant property, such as a one-year rates holiday, until full reform of the system is possible.
"This would help to break the cycle of decline that empty shops can create."
The CBI is also urging the Government to stick to its deficit reduction strategy, saying the job is only half done.
It also wants to see reforms to support energy investment including an extension of targets that gas and electricity suppliers have been told they must meet under the Government's Energy Company Obligation (ECO).
ECO obliges firms to subsidise energy saving measures for certain qualifying households - and have been blamed by them for recent tariff hikes.
There are widespread expectations that the Government will announce changes to the way the scheme is paid for. The CBI says targets set out under the programme should be pushed back from 2015 to 2017.
The CBI is also calling for measures to accelerate house building, kick-start lending for small businesses and tackle youth unemployment. The autumn statement is due on December 5.
High streets minister Brandon Lewis said: "This Government is supporting business and entrepreneurs.
"Corporation tax is set to become the lowest in the G20; a new employment allowance will mean 450,000 small businesses no longer have to pay national insurance contributions and because all business rates remain linked to inflation there has been no real terms increase in bills for over 20 years.
"We have doubled small business rate relief for the past three years, helping an estimated half a million small firms, who are at the heart of our national economy, meaning 300,000 had no rate bill to pay at all. Latest figures show that small business received a total of £900 million last year."