Newcastle-based chartered surveyors, Sanderson Weatherall, are calling on the chancellor to hand a higher proportion of business rates revenue to struggling regional economies when he makes his Autumn Statement.
Richard Farr, a partner at the firm, said the current 50% councils are allowed to retain under the business rates retention scheme could be increased to stimulate business growth and regeneration in towns and cities most affected by the recession and austerity measures.
He said: “Whilst it has already started to rouse local economies, this scheme has the potential to really spur a revival of many hard-pressed towns and cities if the amount councils can retain were to be increased to around 75% per cent.
“This would serve as a real boost, generating more funds and providing greater flexibility in how the money is put back into local areas, as well as further reduce councils’ dependency on central government grant funding.”
Under the business rates retention scheme, authorities keep a proportion of the business rates paid locally.
The scheme is aimed at providing a direct financial incentive for councils to work with local businesses, creating a favourable environment for growth.
“The current rates system is rooted in the last century and cries out for reform, which could be achieved by overhauling the existing system rather than fundamental change,” Mr Farr added.
Rates revaluations are scheduled to take place every five years. However, the Government has postponed the revaluation planned for 2015 for a further two years.
Since 2010, businesses have been paying rates during times of austerity based on top-of-the-market rents calculated in 2008, when the economy was booming.
The planned 2015 revaluation would have seen business rates being calculated at 2013 rateable values.
Now, however, they are set be calculated at 2015 values, which are likely to be higher.
Mr Farr added: “I am gravely concerned by the lengthy revaluations process which currently stands at five years.
“In many sectors and geographical areas, a major imbalance exists between rateable value and market rent.
“In the north particularly, current rents are 10-20 per cent below 2008 levels and in some sectors as much as 40% less.
“In a fast moving economy, a five year review period is too long, particularly when the two year preparation time is added.
“In a ‘real time’ world, dominated by almost instantaneous data streams, it is extraordinary that the Government requires two years to collect the data and prepare the valuation list.
“I would suggest that this exercise could be completed within six to 12 months and revaluations should take place every three years.
“In this way the whole process is aligned with market trends.”
He added that through the Autumn Statement the chancellor could also offer further rates relief on setting next year’s uniform business rate.
George Osborne will have to choose whether to follow the September Retail Price Index of 2.3% or to vary it, as he did last year when he capped the increase at 2% rather than adopt the full RPI rise of 3.2%.
Sanderson Weatherall has regional offices in Newcastle, Teesside, Darlington, York, Leeds, Manchester, Bristol, Exeter and London.
The firm employs around 200 people and has a turnover of £14m.