North East Manifesto: Why tackling business rates is so important

One in five shops stands empty in the North East - a rate higher than any other region - and our readers believe business rates need to be slashed

One of the empty shops in North Shields Town Centre
One of the empty shops in North Shields Town Centre

To give small businesses the support they need, the next Government must slash business rates as soon as possible.

That was the message that came out loud and clear in the results of our North East Manifesto survey earlier this month.

The region has the country’s highest rate of empty shops, overtaking the North West in the Local Data Company’s latest survey.

On average, one in five shops stands empty on our high streets and a complicated and inflexible business rates system is believed to be a root cause.

With sluggish growth, the issue has never been more important as we see small family businesses buckle under the strain.

In your North East Manifesto survey, there was huge support for a business rate cut at 47.1%.

Other suggestions to help small firms was for the UK stays in the EU (10.6%) and a cut to Air Passenger Duty at regional airports (8.3%).

But, 34% of respondents said that all three were of equal importance to help small local businesses, underlining business rates as the key concern.

Ross Smith, director of policy for the North East Chamber of Commerce, said reform is urgent for members.

He said: “Business rates are overly complex to calculate, take no regard of ability to pay, and guarantee a certain tax take for Government regardless of the state of the economy.

“What’s more, the hugely delayed revaluation leads us to suspect that businesses in the North East have been paying unduly high rates since the downturn compared to the south, where property values were much more robust

“Reform has been promised under the last Government, and the next one must follow through with it.”

The Coalition Government has began a review into business rates but failed to tackle the issue head on.

Now, all parties are promising reform but none has been specific on what is on offer.

The shop vacancy rate stands at 13.3% nationally, while in the North East the same figure is 18.8%.

This stands in contrast to the North West, which formerly had the highest rate but is now at 16.8%.

There is also a North-South divide. The North East, North West and West Midlands all have shop vacancy rates double London’s. On average one in 10 shops lie empty in the South, whereas in the North the figure is one in five.

While the Portas Review has seen some funds passed to local Government to tackle and events such as Small Business Saturday aimed at shifting the focus to small firms, many in the business community feel rates are the primary concern.

Ted Salmon, North East regional chairman of the Federation of Small Businesses (FSB), welcomed the Coalition’s review but said more needs to be done by the next Government.

He said: “The current system is out of date and needs to be put out to grass. It’s complicated, opaque, regressive and unresponsive to changes in economic conditions.

“Many of our members tell us paying business rates is their third biggest cost after rent and wages, yet the tax is poorly targeted and not based on ability to pay.” Simon Hanson, North East development manager for the FSB, added devolving more powers could see small firms receive a boost.

He said: “The biggest issue that many of our members raise who are based on the high street is the high cost of business rates and the inflexibility of some local authorities to support them.

“In some areas we have seen business rates rise higher than rents which is unacceptable.

“If local authorities are serious about supporting high streets more needs to be done to get the appropriate business rates reliefs to eligible businesses. Too often we’re still hearing that this isn’t the case across the region.”

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