Industry calls for reform of archaic business rates in ten-point plan for economic reform

Britain’s manufacturers have called on the government to address the archaic systems of business rates and replace them with a modern tax system which acts as an incentive to invest rather than working against capital investment.

The call has been made by Stephen Phipson, Chief Executive of Make UK, ahead of this week’s Budget, as part of a ten-point economic plan to boost investment, improve skills, and prepare industry for the digital future.

The need to provide a shot in the arm to investment is critical given the need to boost productivity with the UK having had the lowest level of private investment in capital as a share of GDP in the G7 for over two decades.

Currently, any investment in plant and machinery is included in the calculation of business rates, which, according to Make UK, clearly penalises investment in capital.

Phipson said: “Low levels of private sector investment and poor productivity have been the Achilles heel of the UK economy for decades. One of the numerous reasons for this is the archaic system of business rates which acts as a massive disincentive to invest given the increasingly high cost of capital investment.”

“The disproportionately impacts on companies in the Midlands and the North where industry has a high exposure.”

“December’s election has provided some much needed certainty and business is looking to respond to that in a positive and optimistic way. I know the Chancellor is keen to help businesses grow and hope he can set out an economic vision for the new administration by announcing a complete review of the tax treatment of investment, including complete reform of business rates.”

“This will help turbo-charge the economy at a time that the economy needs it and help deliver regional rebalancing and faster.”