- Simon Lowth says plan to hike rates for large properties will backfire
Government plans to hike business rates on large properties risk backfiring and sparking a downturn in investment in critical infrastructure, BT Group chief finance officer Simon Lowth has warned.
Businesses across the country are waiting for details on significant reforms to the business rates system in the upcoming November Budget, with Rachel Reeves set to reveal how the Government will fund permanent relief for smaller firms.
The Government is thought to be targeting large distribution properties, such as warehouses used by online retailers, with the intention of cutting rates for retail, hospitality and leisure firms.
But BT’s Lowth warned on Thursday the move could have ‘serious unintended consequences for the services that keep the country and the economy running’.
Lowth wrote in an open letter that BT is currently investing around £5billion in the UK each year and plans to invest ‘billions more before the end of the decade’, but Labour’s plans ‘risk a slowdown in infrastructure investment at a time when the nation needs it most’.
The shake-up affects BT because business rates also apply to physical assets such as fibre cables and ducts, telephone exchanges, and mobile masts.
BT’s Simon Lowth warns business rates shake-up plan could harm economic growth
It follows BT chief executive Allison Kirkby’s claims last month that British telecoms firms pay ’10 times’ the amount of ‘Government-inflicted costs’ as European peers.
Lowth said proposed business rates changes could result in a ‘small number of UK infrastructure providers bearing a disproportionate level of the cost’.
He predicts infrastructure groups could end up paying up to £400million between them each year, compared to an annual bill of just £250million between large distribution warehouses
‘These are businesses investing in the energy, transport, and digital networks that underpin the economy and the country as a whole,’ Lowth added.
‘Penalising them risks slowing investment in the fabric of the nation and the networks and services we need to fuel growth.’
Lowth also warned the impact would hit warehouses used by haulage firms and UK retailers, ‘meaning that tech giants may only pay a small portion of what is needed to properly support small businesses’.
He said: ‘As a result, these reforms are unlikely to rebalance the system in favour of the high street.
‘And more than that – the new business rates could become a tax on UK infrastructure, at a time when the country needs investment most.’
Change is needed
However, Lowth accepts there is need for change to the business rates system, which is ‘widely seen as outdated, unfair, and a drag on growth’.
He said business property is already taxed ‘considerably more in this country than our European neighbours’, thereby decreasing competitiveness.
Lowth welcomed Government plans to abolish the Valuation Office Agency, which oversees how business rates are calculated, and move its functions into His Majesty’s Revenue & Customs.
He said: ‘This could be a positive step; especially if HMRC uses the opportunity to build a fairer and more transparent system.
‘They’re also considering a range of other longer-term reforms which could improve how the system works.
‘The VOA is currently revaluing every commercial property in the UK. This is a major concern to businesses of all sizes, as it has been argued that its approach can lack transparency and accountability.
‘There is also a significant risk that the VOA takes decisions which stifle economic growth.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .