The great Uniform Business Rate rip-off

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Thursday 2 March 2006 10.17am
Way back in 1991 our then building was the subject of a 2,700% increase in business rates simply because my wife and I had invested in regenerating the building. The Inland Revenue's argument was that, because the building was worth more in rental terms then the building should contribute more in business rates? Ignore the fact that the Chancellor gets his cut of real rental income through income tax. Ignore the fact that if the building is better used then more money will be generated for the local economy. Most importantly, ignore the fact that run-down buildings or lower value buildings actually cost the taxpayer more than better condition buildings. Its a bit like saying that if you run an old banger of a car then you should pay less for your petrol than someone with a new car! What a joke.

So, after 15 years, has anything changed? Well, unsurprisingly, no. The Inland Revenue have just sent out (at huge cost to the taxpayer) the new Business Rate valuations and they propose that the business rates for the building go up by another 62%!

Now, that would suggest that rental values have risen by 62% in the last 5 years. What planet do these guys live on? Certainly not planet earth or planet SE1. If inflation is 2% per annum then rentals might (stress the MIGHT) have risen to 110% of their 2000 level, but I doubt it.

If the BID scheme allows you to opt out of Business Rates in favour of buying services directly then I'm all for it.

Regards

Niall Connolly
Monday 6 March 2006 12.43am
No offence mate, but your property must have gone up thousands in value in the time you've been whinging.

There are people out here trying hard just to get off the ground.

You moaning about the value of the property is a bit of an insult to those who are just trying to make do.
Monday 6 March 2006 11.46pm
MickeyBoy_se1

I'm not sure if you read my original post which referred to the "UBR rip-off". UBR (Uniform Business Rate) claims to be a charge, supposedly for 'local service provision', based upon the Inland Revenue's view of what they think is the rental value of commercial property. I did not refer to the value of my property but I did refer to the Inland Revenue's claimed rental valuation for the commercial component of my property. The two things are rather different.

The Inland Revenue increased the UBR for our studio by 2,700% in 1990, less than one year after we completed the renovation of the building. Things may be different in your part of SE1 but rental values haven't risen by 2,700% in the 16 years since 1990 and certanly didn't rise by 2,700% in the year before 1990.

Back then, my wife and I were trying very hard to get our project off the ground and this unjustified increase in UBR of 2,700% almost finished us. But we struggled on and have survived, no thanks to the Uniform Business Rate process. The building, which had supported three 'minimum wage' salaries before our ownership, supported two businesses with 15 employees after our renovation. In this regard, I'm proud of the contribution that I have made to the recovery of the local economy by renovating what was previously a derelict and dangerous building.

What this experience has shown is that the Uniform Business Rate process is nothing less than a tax upon investment, regeneration and employment. Even worse, it encourages businesses to promote the decay of their property (see the antiques warehouses on Bermondsey St and Newhams Row) to avoid UBR tax hikes. It ignores the fact that, generally speaking, lower value property puts greater pressure on local amenities than does higher value property (see Sol Beer warehouse, Bermondsey St c1994 vs Swan Court office development, 9 Tanner St).

A not unconnected effect of the introduction of UBR in 1990 was the ability of water utilities to charge commercial premises for water based upon their UBR valuation and not upon actual use of water (something that the Thatcher government wrote into the water privitisation legislation). In our case, that translated into Thames Water charging us 1,500 per annum for water services. When they refused to install water meters we were forced to install our own and, surprise surprise, our water charges, based upon actual consumption, fell by 82%. This little bung (about 1,350pa in our case) translated into the water utilities trousering some 1.2bn per annum in overcharging in England and Wales, thanks to the generousity of the Thatcher administration. Something that certainly didn't harm the privitisation process.

Anyway, sorry to have rambled on a bit but I did want to clear up what I felt was your misunderstanding of my observations.

Regards and best wishes

Niall Connolly

PS Marx had something interesting to say about 'value'. He thought that a lettuce leaf always made a better meal than a plate of 'value' and I agree.

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