IN the blizzard of financial measures aimed at mitigating the impact of coronavirus, business rates relief is recognised as critical.
The Budget on March 11 contained a £30 billion support package including a 12-month period of 100 per cent relief for businesses in the retail, hospitality and leisure sectors in England with a rateable value of up to £51,000. One week later that £30 billion response had risen to £330 billion and the £51,000 cap removed.
Business rates are devolved, so Wales, Scotland and Northern Ireland each received their proportionate share of the cost of the 100 per cent relief (a Barnett consequential). Wales was the first to announce a rates relief package similar to that in England, with Scotland rapidly following suit.
On Tuesday Finance Minister Conor Murphy said all businesses in Northern Ireland will pay zero rates for the next three months.
And while Wednesday’s Executive statement indicated further announcements on business rates would be made in the coming days, Northern Ireland remains the only region of the UK not supporting its businesses with a 12-month rates holiday.
Stormont is now suggesting the money available from the Treasury to offer 100 per cent rates relief here fell “far short” of what is required, yet it met the needs in Scotland and Wales. So why so?
The answer is that the Barnett Consequential will have been calculated by Treasury based on the amount necessary to move businesses in England from their current level of support to the 100 per cent level.
The shortfall arises because our small business have historically received from Stormont a significantly lower level of rates support than anywhere else in the UK and so the gap which must be bridged to get us to 100 per cent relief is so much greater.
The reason our level of support is lower is that year after year when Stormont got rates related Barnett Consequentials it usually quietly pocketed the money and did not, like Scotland and Wales, increase the support to the business sector. Over the last nine years Stormont receive some £250 million in additional support but passed on very little of it to businesses.
Indeed, over the last three years Stormont received £81 million in Barnett Consequentials for business rates related issues, but used only £1.8 million to support small businesses here.
This pocketing of 98 per cent of the recent business rates relief has now come back to haunt Stormont in several ways.
Firstly our businesses will go into the coronavirus war with lower cash reserves than would have been the case if they had received an equitable level of business rates support over the years.
Secondly, Stormont will have little leverage with the Treasury in seeking additional funds to bridge the gap as for years they “filled their boots” with the relevant Barnett Consequentials and just spent most of the money elsewhere.
Stormont has therefore delivered a policy outcome whereby Northern Ireland has by far the highest proportion of vacant shops anywhere in the UK, had for years suffered from significantly higher business rates than anywhere else in the UK and where our local businesses had for years very significantly lower levels of business rates support than anywhere in the UK.
This represents a significant historical policy failure by Stormont which might well lead to a higher level of coronavirus related business failure than would otherwise have been the case.
Our MLAs need to ensure this unfairness is ended now and our businesses get a 12-month 100 per cent rates relief in line with the rest of the UK.
