Ten leading manufacturers including Tata Steel and Vauxhall write to chancellor calling for urgent rates system review
British manufacturers have urged George Osborne to overhaul the business rates regime, saying the tax is blocking investment.
In a letter to the chancellor seen by the Guardian, 10 leading manufacturers, including Tata Steel and carmaker Vauxhall, call for an independent review of the business rates system and urge action in the budget.
The manufacturers say business rates are acting as a barrier to economic rebalancing and investment, preventing the expenditure that Osborne has said will power a “march of the makers” in the UK.
The Treasury is already reviewing how business rates are administered, but the letter says the study does not fully address the concerns of manufacturers.
If firms invest in equipment and machinery, the rateable value of their premises goes up. Manufacturers told Osborne that in some cases the tax increase resulting from such investments wiped out the benefit of efficiency savings.
Vauxhall said it had, for example, abandoned plans to install solar panels at its plant in Ellesmere Port, Wirral, because it would have increased business rates.
A spokeswoman for Vauxhall said business rates had always been an issue but had moved up the agenda because of retailers’ calls for a revamp of the system. “Large-scale manufacturers’ voices are not being heard,” she said. “Retail is far more emotive to voters as they are on the high street.”
In the long term, manufacturers want to switch the system away from rates based on property values to a valuation based on the income generated by a property.
Retailers are also calling for a rates revamp and released their initial ideas for change earlier this month. The British Retail Constortium presented those ideas to MPs at the communities and local government select committee earlier this week. However, Simon Danczuk, the Rochdale MP who sits on the committee, said the ideas were “half-baked and subjective” and intended to help out large supermarkets at the expense of small stores and manufacturers.
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