Government’s Own Data Reveals Its Justification for Rate Revaluation Delay Is Untenable

A leading business rates specialist has said that the Government has had to backtrack on its claimed justification for the rate revaluation delay as he predicted.
Jerry Schurder head of rating at Gerald Eve was speaking as the Government published estimates prepared by its Valuation Office Agency of the likely effects of the 2015 business rates revaluation. The Government has proposed to defer the revaluation until 2017.

Schurder said: “When the Bill was introduced in Parliament, the Government claimed that its purpose was to provide certainty for businesses and to wipe out what would have been ‘large tax hikes’ for small shops and firms, highlighting retail as one key sector which would have been adversely effected, together with pubs, hotels and petrol filling stations.

“Our own research identified that property values had plummeted in high streets up and down the land since the last revaluation based on 2007/2008 rents and that huge swathes of town centre shops would have benefited from the 2015 revaluation.”

Schurder said that the VOA figures reveal that the Government can no longer claim the retail sector which makes up 20% of all Rateable Values as one that would have faced ‘big tax hikes’.

He said the Government has been digging around trying to identify other sectors for which the revaluation postponement could be seen as good news.

“The rabbits it has pulled from the hat are theatres and caravan parks. But their values makes up less than 0.3% of the total of all assessments in the country and makes a mockery of the claim that somehow the postponement of the revaluation assists struggling businesses,” said Schurder.

Despite the clear backtracking, the Government continues to claim that 800,000 properties would have faced increased bills following the 2015 revaluation while only 300,000 would fall.

Schurder doubts these claims, adding: “We do not consider that at the high level of the VOA’s estimates it will be possible to validate and justify such analysis. To do so would require huge numbers of individual property valuations to have been undertaken and there is no indication that this detailed exercise was carried out.

“In a blatant example of unsubstantiated spin, the only way that the Government can claim that 800,000 properties would have faced increases in 2015, is to assume that most of the 520,000 of properties for which it does not have ready data would have faced increases.”

He concluded: “The bottom line is that the postponement of the revaluation will condemn struggling businesses to continue to pay excessive rates for a further two years, whilst providing subsidies to those sectors that have prospered despite the recession such as London shops, theatres and caravan parks.

This preposterous and perverse decision negates the fundamental purpose of rating revaluations which is to ensure that each property pays a fair share based on reasonably up to date property values. This was a knee-jerk decision made without any proper impact assessment or consultation with businesses and is no way for a responsible and business friendly Government to set national taxation policy”.