LEAP Funded Report Calls For Greater Protection For Small Businesses

28 September 2017

A new report, analysing the impact of the 2017 Business Rates revaluation was launched today. The report was funded by the London Economic Action Partnership (LEAP) as part of its activity to support London’s small and medium sized enterprises.


The research, which was commissioned by the Federation of Small Businesses (FSB) and Camden Town Unlimited, shows urgent need for reform of the English business rates system to limit its impact on firms in the capital. Greater protection is needed for small businesses, the joint report claims, as it calls for the no pay rate for small businesses to rise from the current level of £12,000 to £20,000 in inner London. It also outlines several short, medium and long-term recommendations that should be taken in London to support its businesses.


The main short-term recommendations include forming a more sophisticated system of rate thresholds and reliefs, as the capital needs more realistic thresholds that consider the value differential between Inner and Outer London.

The report also addresses the concerns surrounding cuts faced by the Valuation Office Agency, which plays an integral role in ensuring that the rates businesses pay are correct. Therefore, the medium-term recommendations include the VOA being effectively resourced to minimise errors in assessments and unresolved appeals.

According to the report, London bears 32% of the rates payable, despite only having 16% of rateable properties. While the rates are a standard tool, it is unreasonable to assume that London’s businesses are able bear such a burden. The long-term recommendations therefore advise that central government carry out a review that revisits where the responsibility of the setting and administration of rates lies. Additionally, the review could also consider the extent to which local taxation ought to be devolved.


The report also shows that London’s smaller firms face uncertainty in 2018 because of the inadequacies of the local discretionary relief scheme. For example, of the £300 million that is being administered nationwide, by 2020, London’s allocation falls very close to £0, thus providing insufficient support beyond year one of the five-year revaluation period.


LEAP Chair and Mayor of London, Sadiq Khan, said:


“No one denies that London needs to pay its share but the current system is skewed against the capital,


“The best solution would be full devolution of business rates to London, combined with genuine protection for businesses, so that London… can act in the interests of Londoners and their businesses.”


LEAP Board Member and Chief Executive of Camden Town, Simon Pitkeathley, said:


“The cost of doing business in the capital is increasing and our outdated rates system is sending the wrong signal to London’s small companies.


“We are hopeful that these new findings remind the government why business rates reform should be prioritised.”