The chancellor has promised rate relief to London businesses – but the north will foot the bill

Chancellor Philip Hammond plotting to do unspeakable things to the north. Image: Getty.

In his Budget last month, Chancellor Phillip Hammond set out the final parts of his relief package to help firms facing the largest increases in business rates cope with the changes they’re likely to face.

Many commentators have called for measures to ease the shock of these increases. What they probably haven’t realised is that the introductions will mainly help London businesses – and it will be northern companies that will foot the bill.

There are two parts to the overall relief package that the chancellor has put together to deal with changing business rate bills. The first includes the announcements made in the Budget: cuts for pubs, help for small businesses no longer eligible for relief as a result of the valuation of their property going up, and a £300m hardship fund for local politicians to help local businesses of their choosing. All of these changes will be funded by the Exchequer.

The second part is transitional relief, a fund that was used after the last revaluation of commercial property in 2010 to deal with cliff-edge increases, and will be used again from April. But there is a catch with this relief – unlike the other part of the relief package, it must be revenue neutral. So any cap on increases for businesses seeing the largest increase in their tax bill must be matched with a limit on the size of the decreases of those businesses set to see the largest falls.

Businesses in London will be hardest hit by the revaluation of commercial property. This means that it will be mainly the capital’s businesses that stand to benefit. And it will be companies further north footing the bill.

Source: VOA.

The delay to revaluation has meant that businesses in struggling areas have been paying too much tax in recent years, because their properties have been overvalued by the taxman. They will finally see a fall in their rates from this month. But this fall will not fully reflect the reduced valuation of their property – because their reductions have been limited to fund relief elsewhere.

The result is that these businesses will continue to pay more tax than they should. In Manchester we estimate that this will be to the tune of £42m, which will be used to help cover the near £500m of relief for London businesses.

The sector that stands to be hardest hit by this is retail (somewhat ironically given that the anti-rates lobby has focused on the impact that revaluation will have on small retailers). Retailers in London will get welcome relief; these include Harrods and Selfridges, which are set to get relief worth a combined £1.5m. But we estimate that the relief package will mean that the total business rates bill for shops in Birmingham will go up by £10m next year, while it will be £27m higher in Manchester.

To be clear, helping London businesses deal with the increases is a good thing – the cliff-edge increases they face are a fault of policy, and it’s right to help them. But making businesses elsewhere fund this, who have already been overpaying for many years, is not the way to do so.

How can we correct this fault in the system? The following two things need to happen:

  1. Make revaluation annual or bi-annual. In his budget, the chancellor committed to undertaking a consultation, and set out his preferred option for the future by 2022. This means that we are likely to face these issues all over again in five years’ time, with businesses facing large swings once more after five years of rent changes.
  2. Remove the requirement for the total amount of business rates generated in England to remain constant. The requirement for revenue neutrality means that any special treatment given to one group of businesses automatically means that other businesses have to pay elsewhere in the system. For example, relief for small businesses means big businesses must pay more: it’s a zero-sum game. And transitional relief will mainly help businesses in the Greater South East to the detriment of those further north.

Taking these steps would have helped to make business rates fairer, more accurate and less volatile. By failing to do so in the Budget, the government has missed a big opportunity to address the problems in the business rates system.

Paul Swinney is senior economist at the Centre for Cities, on whose blog this article was first published.

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America's cities can't police their way out of this crisis

Police deployed tear gas during anti-racism demonstrations in Los Angeles over the weekend. (Mario Tama/Getty Images)

As protesters took to the streets across the United States over the weekend to express their anger at police killings of unarmed black Americans, it was hard to miss the hypocrisy coming from local authorities – including the otherwise progressive, left-leaning officials who are in power in most major American cities. 

Many US mayors and their police chiefs had issued public statements over the past week that seemed – only briefly, as it turned out – to signal a meaningful shift in the extent to which the Black Lives Matters movement is being taken seriously by those who are in a position to enact reforms. 

The sheer depravity of the most recent high-profile killing had left little room for equivocation. George Floyd, 46, died last Monday under the knee of white Minneapolis police officer Derek Chauvin, while three additional officers helped to hold Floyd down, doing nothing to aid him as he begged for them to stop and eventually lost consciousness. The officers had been attempting to arrest Floyd on suspicion of having used a counterfeit $20 bill at a deli. All four have since been fired, and Chauvin was arrested Friday on charges of third-degree murder and second-degree manslaughter. 

“The lack of compassion, use of excessive force, or going beyond the scope of the law, doesn’t just tarnish our badge—it tears at the very fabric of race relations in this country,” Los Angeles Police Chief Michel Moore told the Washington Post in response to the Floyd case. Meanwhile Moore’s boss, Los Angeles Mayor Eric Garcetti, on Friday claimed that he understood why his city, which is no stranger to police brutality, was protesting. “We absolutely need as a nation, certainly as a city, to voice our outrage, it’s our patriotic duty to not only stand up for George Floyd but for everybody who has been killed unnecessarily, who’s been murdered for the structural racism that we have in our country,” Garcetti said. 

Normally, US police chiefs and mayors tend to ask citizens to withhold judgment on these types of cases until full investigations can be completed. But a 10-minute video recording of Floyd’s killing had made what happened plain. Police chiefs across the country – and even the nation’s largest police union, which is notorious for defending officer abuses – similarly condemned the actions of the Minneapolis officers, in a rare show of moral clarity that, combined with the arrest of Chauvin, offered at least a glimmer of hope that this time things might be different. 

As the events of the weekend have since shown, that glimmer was all too fleeting. 

In city after city over the past three days, US mayors and their police chiefs made a series of the same decisions – starting with the deployment of large, heavily armed riot units – that ultimately escalated violent confrontations between officers and protesters. Images widely shared on social media Saturday and Sunday nights made it clear that members of law enforcement were often initiating the worst of the violence, and appeared to treat protesters as enemy combatants, rather than citizens they were sworn to protect. 

In New York City, two police SUVs were seen plowing into a crowd of protesters, while elsewhere an officer was recorded pulling down a young protester’s coronavirus mask in order to pepper spray his face

In Louisville, the city where Breonna Taylor, a 26-year-old black woman was fatally shot by police on 13 March, state police in riot gear were captured confiscating and destroying protesters’ supplies

In Minneapolis, forces opened fire with nonlethal rounds on residential streets, much to the shock of homeowners standing on their own front porches. 

Images of police pushing or shoving peaceful protesters were almost too numerous to count, including, in Salt Lake City, an elderly man with a cane

In many places, police also targeted journalists who were covering the protests, firing at clearly identifiable media crews with rubber bullets, injuring and even arresting reporters

Some protesters did commit acts of vandalism and looting, and the leaders of cities where that happened generally responded in the same ways. 

First, they blamed “outside agitators” for the worst protester behaviour, a claim that harkens all the way back to the civil rights era and for which the evidence is murky at best

Next, they enacted sudden curfews with little to no warning, which gave law enforcement an excuse to make mass arrests, in some cases violently. 

In a pair of widely criticized moves, Garcetti of Los Angeles closed the city’s Covid-19 testing centers and suspended the entire mass transit system Saturday evening, stranding essential workers on their way home from daytime shifts. Late Sunday night in Chicago, the city’s public school system halted its free meal distribution service for low-income children, citing “the evolving nature of activity across the city”.  

Governors in at least 12 US states, in coordination with city leaders, have since called in National Guard troops to “help”. 

At this point it’s clear that the leaders of America’s cities are in desperate need of a radically different playbook to respond to these protests. A heavily armed, militarised response to long-simmering anger toward the heavily armed, militarised approach to American policing is more than ironic – it’s ineffective. Granting police officers wider latitude to make arrests via curfews also seems destined to increase the chances of precisely the tragic, racially biased outcomes to which the protesters are reacting. 

There are other options. In places such as Flint, Michigan, and Camden, New Jersey – both poor cities home to large black populations – local law enforcement officials chose to put down their weapons and march alongside protesters, rather than face off against them. In the case of Camden, that the city was able to avoid violent clashes is in no small part related to the fact that it took the drastic step of disbanding its former police department altogether several years ago, replacing it with an entirely new structure. 

America’s cities are in crisis, in more ways than one. It’s not a coincidence that the country has tipped into chaos following months of emotionally draining stay-at-home orders and job losses that now top 40 million. Low-income Americans of colour have borne a disproportionate share of the pandemic’s ravages, and public health officials are already worried about the potential for protests to become Covid-19 super-spreading events.

All of this has of course been spurred on by the US president, who in addition to calling Sunday for mayors and governors to “get tough” on protesters, has made emboldening white nationalists his signature. Notably, Trump didn’t call on officials to get tough on the heavily armed white protesters who stormed the Michigan Capitol building over coronavirus stay-at-home orders just a few weeks ago. 

US mayors and their police chiefs have publicly claimed that they do understand – agree with, even – the anger currently spilling out onto their streets. But as long as they continue to respond to that anger by deploying large numbers of armed and armored law enforcement personnel who do not actually live in the cities they serve, who appear to be more outraged by property damage and verbal insults than by the killings of black Americans at the hands of their peers, and who are enmeshed in a dangerously violent and racist policing culture that perceives itself to be the real victim, it is hard to see how this crisis will improve anytime soon. 

Sommer Mathis is the editor of CityMetric.