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Crossrail funding threatens London revival.
London's economic revival risks being undermined by the significant increase in retailers' business rates contributions to fund Crossrail.
Reacting to the Mayor's Final Prospectus for the Crossrail Business Rates Supplement the British Retail Consortium (BRC) said, while Crossrail is much needed and long overdue – the financial demands being made on retailers to pay for the project should be considerably lower.
As a result of the 2010 business rates revaluation retailers will start paying 41.4p per pound of the rateable values of their properties in business rates. In addition, the Mayor has the power to levy a further supplement to fund Crossrail and has chosen to introduce the maximum increase possible of 2p in the pound. Both these taxes start on 1 April. The Mayor's decision will mean a five per cent increase in business rate bills for the properties affected.
The BRC had called for lower business contributions to Crossrail, especially in the first few years of funding. Shops in the capital are already facing significant property related cost increases: this year's business rates revaluation is expected to raise London's business rates by a bigger percentage than any other region. Cash flow will also be severely harmed for some retailers by the deferment of 2009's inflation busting business rates increase and the continuing failure to reintroduce empty property rate relief.
Retailers already pay around a quarter of all business rates. The imminent revaluation in England will see the retail sector forking out over £5.8 billion in rates – the biggest contribution of any sector.
The BRC also estimates retailers will pay out a quarter of billion pounds in extra business rates before they see any benefits from Crossrail.
Tom Ironside, British Retail Consortium Director of Business Environment, said: "Crossrail is much needed and long overdue but London retailers will pay out far more than their fair share.
"Requiring retailers to disproportionately fund Crossrail is wrong at any time but is especially ill-timed given weak consumer demand and high levels of unemployment.
"The Mayor should have significantly reduced retailers' contributions to funding Crossrail. They're going to be hit by a huge bill from rates revaluation and the impact of business rates postponed from last year. But shops will only see any benefit from their financial contributions by 2017 at the earliest and will continue funding the project until 2036.
"Retailers already contribute the largest share of business rates and this April's revaluation is expected to raise London's business rates by the greatest proportion of any UK region."
The entry point at which businesses are required to start contributing to Crossrail has been slightly increased to a rateable value of £55,000 (previously £50,000). While this is welcome news for the properties affected, it simply increases the long-term burdens for those businesses still be required to pay for the project.
Tagged as: cross rail | retail | london |
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