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£1.5 billion fund unlikely to be distributed until the end of the year

“It beggars belief that the Chancellor has no intention to extend the rates holiday”

Tens of thousands of companies face crippling delays to promised business rates relief after crucial legislation was bumped from the Parliamentary timetable.

The Government shocked businesses in March when it announced that no future pandemic-related appeals against business rates liabilities would be permitted, and that it was planning legislation to retrospectively revoke all those already in the system. Instead it promised a £1.5 billion relief fund for firms outside of the retail, hospitality and leisure sectors, which property consultancy Gerald Eve dismissed at the time as ‘woefully inadequate’ and ‘the equivalent of prescribing paracetamol to treat a broken leg’.

But with the Government unwilling to issue guidance to local authorities on which types of businesses the fund is intended to support until the legislation outlawing Covid related rates appeals has passed, concerns mounted that any relief would be too little too late for struggling firms.

Those fears have been compounded by the second reading of the Bill being postponed this week, which makes it highly unlikely it will receive Royal Assent before the summer recess. Experts at Gerald Eve believe the new timetable means no payments will be made until the end of the year, some 20 months since the start of the pandemic.

The news is another blow to retail and hospitality firms, with the Treasury refusing to extend the rates holiday, despite the delay in the reopening programme meaning that the vast majority continue to operate at well-below full capacity.

Simon Green, head of business rates at Gerald Eve, said: “The Government’s refusal to issue guidance around the fund’s distribution, let alone actually provide the funds for councils to issue, and its complete rejection of an extended rates holiday for those still operating below full capacity, illustrate its ignorance of the distress these firms are in and the lack of substance behind its claims to be doing ‘whatever it takes’.

“Pubs, restaurants and hotels face a swift return to substantial rates bills despite trading circumstances limited by law, with only the sticking plaster of a short-term discount to help some of them. But for firms who have received not a penny of business rates relief since the start of the pandemic, these latest delays could well prove terminal. The Government could expedite these payments if it wanted to; sadly, we have to conclude it has no interest in doing so.”

Jerry Schurder, business rates policy lead at Gerald Eve, added: “For many outside the favoured sectors – such as suppliers to the hospitality sector and transport-related firms – this has been the hardest trading period in living memory, endured without any business rates support whatsoever. The £1.5 billion fund is wholly inadequate to address the difficulties they face, but they did at least hold out the prospect of some assistance when the fund was announced in March. That prospect is vanishing in the face of Government inaction, further defining the scheme as the epitome of ‘too little too late’. Make no mistake – firms will go under as a result of these delays.

It beggars belief that the Chancellor has no intention to extend the full business rates holiday to cover the four week delay to ‘Freedom Day’. If it was appropriate to allow a full rates holiday until July when restrictions were to have been lifted on 21 June, it must be right that the holiday should now be extended. Now is time for Government to listen to the call of those struggling and we call for  full relief to be extended to the end of the rate year next March as the Scottish and Welsh governments have implemented already.

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Key contacts

Simon Green

Head of Business Rates

Jerry Schurder

Business Rates Policy Lead