British manufacturers have said their business rates bills will increase by nearly £1bn annually and could lead to thousands of job losses in the sector.
Plans to lower rates for properties with rateable values (RVs) below £500,000 came into effect at the start of the month. To fund this, the government has introduced a higher rate for properties with RVs of £500,000 at 2.8p above the national standard multiplier.
The new system disproportionately affects manufacturers, according to industry body Make UK. The changes have led nine in 10 British manufacturers to report an increase in their business rates, with the sector expected to pay an additional £939m every year. As a result, around 25,000 jobs could be at risk, Make warned.
Two thirds reported rises of up to 20%, while almost one fifth face increases between 20% and 50%. Of the 132 manufacturers surveyed, three quarters told Make that business rates were among their top five largest costs, with nearly a third ranking them in their top two.
Although manufacturing represents less than 10% of the UK economy, it accounts for more than a fifth (21%) of total rateable property values. More than half (55%) of manufacturing properties have RVs exceeding £100,000, while one in five are valued above £500,000. In contrast, only 6% of manufacturers have RVs below £20,000, limiting access to relief schemes.
“The current system of business rates is outdated and is a blunt instrument that leaves manufacturers paying disproportionately more than other sectors relative to their size,” said Verity Davidge, director of policy at Make UK.
“This increase couldn’t come at a worse possible time and is set to hammer one of the government’s key strategic sectors, which is already facing existential threats from increased energy and employment costs that are completely out of their control.”
She added: “For many companies right now, just to survive the burdens being imposed on them will be an achievement.”
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