Comment: Tackling business rates would create the lifeline that high streets need

But when I heard the minister with responsibility for the high streets, Mark Prisk, say last week that the Government was “doing everything we can” to help the high street, it set my teeth on edge. Why? Because this is beyond exaggeration. It’s absolute nonsense.

Securing the recovery of the high street – and, most would agree, its transformation to a more sustainable model – remains one of the biggest challenges facing this or any future Government. Trying to evade this or adopt a position of denial is not an option.

If we’re to unpack Prisk’s outlandish claim then the first thing Government must get to grips with is the scale of the problem. Here, they fall miserably short. While the bloodbath on Britain’s high streets has accelerated dramatically in the last year, the Business Secretary, Vince Cable, says there is no crisis.

Certainly, the thousands of people who have lost retail jobs would beg to differ.

When ministers eventually get round to realising that we have a crisis on our hands then the next thing they need to do is face up to the elephant in the room. This, of course, is business rates.

Almost every retailer I speak to complains about this crippling tax burden being the brake that’s holding any chance of recovery back. To put it into perspective, the Government has increased business rate bills by over £500m for retailers in the last two years, while spending a tiny fraction (around £20m) on Portas related projects.

Prisk’s big claim is that the Government is giving local authorities the power to reduce business rates through the Localism Bill under Clause 69. This is true, but local authorities have to pay for any reductions themselves from budgets that are cut to the bone. So, the policy is rendered almost useless.

Freedom of Information (FoI) requests show that only 18 of 326 local authorities in England have used this power to reduce business rates. And just four of the 100 local authorities that received the £10m High Street Innovation Fund money to bring empty shops back into use are using Clause 69. Similarly, despite discounting business rates to aid regeneration being a big focus of the Portas Review of December 11 (recommendation 7), the same Freedom of Information request shows just three local authorities where there are Pilots are using Clause 69. Total business rate relief amounts to a paltry £2.5m against an estimated £21.7bn due to be collected in business rates in 2013/14 (just 0.011%).

By any measure, this policy is an abject failure.

Of course, the injustice has been compounded by the Government’s decision to postpone the revaluation of business rates until 2017, ensuring that deep structural imbalances remain in place. While commercial property values in many parts of the north have fallen by as much as 40% in recent years, their business rates are based on ratings set in April 2008 near the height of the property boom. Consequently, many high street businesses are forced to pay grossly unfair amounts of tax at a time when consumer confidence is incredibly weak. It’s a toxic combination that only has one outcome.

Civil servants have confirmed to me they are aware of these imbalances – but have no plans to do anything about it. They also say there are no plans on the horizon to review the current use of RPI for business rates indexation until its fiscal consolidation plans have been implemented despite the Portas Review. Effectively, they are writing off the prospects of high streets in large parts of the country.

A sign of how undervalued the high street is in Government, the Treasury confirmed under separate FoI requests that they have absolutely no idea what percentage of business rates the high street contributes in taxation.

Moving forward promptly with the revaluation and overseeing a complete overhaul of business rates would be the kind of decisive action where the Government could justify claims that it is doing all it can. Until then, ministers should spare us giddy rhetoric about turning on the afterburners. The reality where the high street’s concerned is that Government has yet to reach first base.

Paul Turner-Mitchell is an independent retailer in Rochdale.