The President of the Confederation of British Industry (CBI) believes changes in the business rates system are long overdue.
In a speech addressing business leaders in central London, John Allen argued that the current system is exacerbating regional inequalities, saying the business rates system is “uneconomical, unsustainable, and frankly, unintelligible.”
Two reasons were put forward as to why, according to CBI’s president, “it’s a system in need of reform.”
He believes that the business rates system discourages investment in growth from businesses.
“Any real efforts to invest will see your business rates rise,” he said.
“It certainly doesn’t give businesses a strong reason to invest in the UK, let alone in areas where capital is most sorely needed.
“That adds yet another barrier to growth at a time when the UK already faces its lowest level of business investment since the financial crisis, far behind our competitors – at only 9% of GDP compared to 13% across the G7, fuelling an ongoing productivity challenge.”
The other reason given for the need to change is the fact rates are entrenching regional unfairness.
John explained: “Part of this problem is the uncertainty around when the next rates revaluations occur.
“The last revaluation period was extended from five years to seven. We can now expect revaluations every three years.
“But in practice, any longer than one year means business rates lag far behind economic cycles and – over the years – the significant rises in UK property costs.
“The result is a system that rewards those places already on their way up in the short term, but eventually pulls the rug from under them.
“And one that punishes those areas that already struggling.”
It is why, the CBI President argues, that both the Conservatives and Labour must follow through with the “comprehensive and independent review of the business rates system” promised in their respective manifestos.