Call for Business rates change to limit economic damage

A change to business rates, and targeted support to industries most in need, will help limit the economic damage caused by the pandemic according to chartered accountancy body ICAEW.

The results of a survey to ICAEW members, found that a third of businesses would need government support over the next six months – and some 70% of those were not confident that the support on offer from the government would keep their business going for the next year.

Business was down at three in five companies and a third expected to make redundancies over the next six months, the survey found.

ICAEW says tha the government needs to review its strategy and consider a sectoral approach to fixing the damage caused by the pandemic, to help sectors – such as hospitality, leisure and retail – which were still struggling.

Three in five respondents said a reduction in business rates would help the high street and therefore boost the economy. Half of respondents said they thought a reduction in employers’ National Insurance contributions would be helpful, and a third said they thought further reductions in VAT rates would be helpful.

Meanwhile, three-quarters of those surveyed said their businesses had accessed one of the government’s loan or support schemes during the pandemic. Three in five had furloughed staff and almost a half had deferred VAT payments.

Iain Wright, ICAEW Director of Business and Industrial Strategy, said “With the latest restrictions casting a new black cloud over businesses that were beginning to recover from the economic effects of the pandemic, it’s clear that more intervention will be needed from government.”

“In particular, some struggling companies could fail when faced with inflexible business rates bills. Reducing the business rates multiplier would bring down the cost of this charge, and therefore lessen the burden on companies at this critical time.”

“Although the whole economy is suffering, it is striking that the economic effects of the pandemic affect some sectors with much more brutal damage than others. Targeted sectoral policy measures from government have been seen to work earlier in this crisis. With the prospect of more restrictions threatening the very survival of businesses in some sectors, chartered accountants are telling us they would like the government to provide financial support on a sectoral basis to help those industries most in need.”