‘Confirm business rate holiday extensions to protect jobs’, Mayor of London and London Councils urge Government

By September 22, 2020NEWS

The Mayor of London, Sadiq Khan, and London Councils have joined together to urge the Government to extend the business rates holiday and help protect thousands of jobs in London and across the country, as the capital’s economy continues to struggle from the effects of the Covid-19 pandemic.

Businesses in the retail, hospitality, leisure and childcare sectors are currently benefitting from 100 per cent relief from business rates for the 2020/21 financial year, in order to help them recover from the impact of the Covid-19 pandemic.

However, the holiday is due to end next March and many London businesses are fearing for their future if they have to begin paying business rates again before they regain financial stability, a serious concern also shared by businesses in the rest of England.

As part of a joint submission to the Government’s business rates review, Sadiq and London Councils are calling for an extension to the current business rates holiday to 2021/22.

Such a move would provide crucial support to businesses reeling from a huge drop in footfall and lack of public confidence due to Covid-19, with the retail, leisure and hospitality sectors the worst hit.

Business groups such as the New West End Company (NWEC) have warned that ending the business rates holiday in March could lead to the loss of thousands more retails jobs without further urgent support from the Government.

Sadiq and London Councils are also urging ministers to make a series of urgently needed reforms to the business rates system to support the capital’s long-term economic recovery and empower local areas, including devolving power and accountability for raising the taxes needed to provide local services.

Before the Covid-19 pandemic, London was due to generate more than £10 billion in gross business rates – a third of the national total. London’s economic recovery following the pandemic will be vital to that of the UK as a whole.

The current system is unstable: following the 2017 revaluation, London now accounts for around a third of the total rates collected in England. In 2019-20, one local authority – Westminster Council – collected £200 million more in business rates than Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield City Councils combined.

What’s more, a single Oxford Street department store paid more business rates than was collected in 2019-20 by around twenty English district councils (1).

Alongside the urgent need to extend the business rates holiday, the key proposals for reform are:

  1. The business rates system should be made far simpler and easier for all businesses to understand
  1. London government and other regional governments should have the ability to control business rate relief – currently set by central government – as well as introducing new relief schemes when they’re needed
  1. London government and other regional governments should be given the power to set business rates

Many of London’s businesses have missed out on Government support during the Covid-19 pandemic because, under the current business rates system, they don’t qualify – despite being in need of urgent financial help.

The Mayor is making the case that this one-size-fits-all approach doesn’t reflect the economic diversity not just of London, but of the entire country.

The Mayor of London, Sadiq Khan, said: “Businesses across London continue to struggle from the impact of Covid-19. If the business rates holiday comes to an end I worry many employers will have no choice but to make more people unemployed.

“Many large retail, leisure and hospitality businesses – accounting for thousands of Londoners’ jobs – are taking important decisions for the next financial year right now, so certainty over the business rates holiday is needed urgently. What’s more, many childcare providers are reliant on the current business rates holiday, and they are crucial in allowing Londoners to return to work.

“But beyond this, local government leaders across the capital are united in calling for long-term reform of business rates system too.

“Devolving control over setting and retaining business rates will be an important part of securing London’s long-term economic recovery and will have a similar impact on other towns and cities.”

London Councils’ Executive member for Business, Europe and Good Growth, Cllr Clare Coghill, said: “Throughout the pandemic, London boroughs have supported their local businesses. Despite Government’s welcome initiatives, many businesses remain fragile, still reeling from the long-term impacts of Covid-19. There is still a need for targeted emergency support.

“Ending the business rates holiday too soon will destabilise too many companies, leading to closures, job losses and a shrinking economy both in London and across the rest of the country. That’s why we are urging Government to continue the discount, particularly for SMEs and those in the most at-risk sectors.

“Looking at the bigger picture, it has been obvious for some time that the business rates system is not working. We believe fundamental reform, with greater local flexibility at its heart, is essential to driving economic growth in local areas and providing sustainable funding for local services.”

Chief Executive of the New West End Company, Jace Tyrrell, said: “The reintroduction of business rates in April 2021 will be a final blow for many businesses already struggling to meet costs as they await the return of international and domestic visitors and larger numbers of people back in their offices.

“The result will be more business closures and potentially 50,000 job losses, severely diminishing London’s appeal to visitors, investors and global talent. We appreciate the support that the Government has given to businesses so far but it is clear that the impact of Covid-19 is going to last much longer than originally anticipated.

“While many businesses throughout the UK have managed to start their recovery, the West End’s International Centre status – with all the implications that has for costs and the need to attract high volumes of visitors from home and abroad – means that this vital part of Britain’s economy needs an extension of that business support if it is to survive to contribute to the UK’s future success and tax receipts to the Treasury.”

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