To revalue, or not to revalue

Truthsayer, Going Postal

Business Rates are in line for a revaluation. It has been all over the news, and of course London is spitting feathers with the most complaining coming from Sadiq Khan (http://theasianpost.co.uk/sadiq-khan-business-rates-reforms-place-our-local-high-streets-under-threat/ ).

Recently a decent article on the matter was actually published in the business pages of the Telegraph (http://www.telegraph.co.uk/news/2017/02/21/business-rates-good-tax-government-should-stick-guns-revalue/ ) which cut to the chase and encouraged HMG to avoid the customary back-pedalling on these occasions by our usually spineless leaders. Its author clearly hopes that rents will drop because of the the rise in rates, but it is unclear that the modern economy works that way now.
The points made in the Telegraph article were good, but failed to totally hit the mark from a GP reader’s perspective, and did leave a little of the usual invisible elephant in the room unspoken.
London will be hit hardest by the proposed valuation. This is because rates are based on notional rental values. Rental values for business premises have gone up a lot in London. That in turn is because domestic property prices have risen substantially, along with domestic rents.
Business premises have been squeezed as landlords look at the value of land and property in the domestic market, and just sell for a song to developers who can convert the premises to flats, or just demolish the site and build flats from scratch. Brentford in West London seems to be a prime example of this.
It is plain to see: pubs shut, offices and industrial sites (often old) close, and more often than not the site ends up as a housing development sold off plan to BTL at home and abroad. A business model where population growth combined with less business premises and higher housing costs was never going to be “sustainable” (that famous expression beloved of the SJW).
Our capital has experienced nosebleed rises in population, and consummate rises in property prices. Demand has outstripped supply and guess what? Prices rose. There have been two solutions for some time. One was stop immigration and require a lot of new arrivals to leave (which would reduce demand); this was a cheap and simple solution, but judged to be ‘racist’ and not possible to implement. The other solution was to build more housing; this is the much vaunted solution trotted out by lefties, metrolibbies, BTL landlords, rental agencies and their shareholders, mortgage lenders and their shareholders, overseas property investors, people and institutions who hold shares in British Land and similar, housebuilders and their shareholders, conveyancers, surveyors, architects, and the media’s entire (polite or common purpose) business commentariat.
Well, the proponents of the latter argument got their wish.
The other issue which springs to mind is what businesses are actually going to be affected. The Costa Coffees, and Starbucks of the world have benefited greatly from the influx of cheap labour which is the root cause of this revaluation; likewise, they are not best known for their accurate corporation tax payments. So some additional rates out of them won’t be a great injustice, and will go some way to mitigate the effect on the public purse of all the in-work benefit claims made by their employees.
The other type of business likely to be impacted is the small shopkeeper, and here is where the opponents of the revaluation are making the most hay; portraying the scenario of the honest small businessman shopkeeper beavering away to make ends meet.
In reality any trip down a main road in London finds a plethora of scruffy take aways, seedy internet cafes, money transfer unions, cheap restaurants, and convenience stores / mini markets , all carbon copies of one another in close proximity if not next door.
I would speculate that it is no coincidence that the wildfire-like spread of these retail outlets occurred at exactly the same time as our nation’s productivity collapsed to thirty year lows, an issue that still greatly concerns serious economists.
These are the “businesses” we are expected to fear the closure of. I would speculate that the closure of half of the obvious glut of these retail business models in London will make no difference to business rates income, and will free up the premises for better business models which will generate real wealth and real taxes.
The reality is that the rates rise for London is a glorious irony. Here is a city that has been swamped with immigrants over decades, leads the way in the “too many people in the country stakes”, and celebrates it. It is the city that voted Remain by a substantial margin, and whose shoutiest leaders have since been banging on about how robust its finances and business contributions to the nation are, whilst citing all sorts of spurious excuses as to why London should be treated differently after Brexit as they desperately try to buck the trend and keep the floodgates open.
Well, the time is nigh for them to put their money where their mouth it. Literally, as Friend Lefty would say.
The massive population growth, championed by the metrolibby lobby of London and its immigrant client state, was always going to result in this. It is one of the obvious side effects of mass immigration. Twelve years olds in 1995 could have told them this was going to be the end result. And here it is served up to them, and as usual “they don’t like it up ‘em”.
The Government should tell ‘em in their own speak so they understand. “What? You don’t like the rates rise in your over-developed city? I’m afraid it is all part ‘n parcel, mate”. “What’s that? The city what voted Remain don’t wanna pay its way? You ain’t no Remainer, bruv”.
And HMG should should not leave it at that.
They should also be telling them this: if immigration continues to run at these current disastrous levels that you have contrived to enable and wish to continue, then when the next revaluation comes along it will mean another big rise in rates for your city, and it will mean the whole of the Home Counties moving up to the level with which London is now facing.

Truthsayer ©