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Business rate divide mirrors that of Brexit

The revaluation of business rates in England, while prosaic in its detail, has created an extremely complicated political situation for the Department for Communities and Local Government and the government.

Rates are a huge source of income for the Treasury — some £24 billion for 2017-18.

The change has come because rates had been calculated off estimates of the “rateable value” of non-domestic properties from as far back as 2008.

The revaluation, as carried out by the independent Valuation Office Agency, has led to a reduction in business rates for the majority of businesses in England but large increases in some areas, because the thing that the rates are calculated off — property prices — have not increased evenly across the country.

The revaluation and the differing fortunes of areas run quite cleanly along England’s Brexit divide. In part this is because areas that had suffered from stagnant local economies and property prices for the past decade voted Leave in far greater numbers than more prosperous areas.

The result is that areas pencilled in for rate rises are disproportionately Remain-leaning areas. Of the 160 seats estimated to have voted Remain in England, 76 of them (48 per cent) of them are likely to have rate rises.

By contrast, of the 373 seats that are estimated to have voted Leave, only 41 (11 per cent) are pencilled in for rate rises.

With some London businesses facing triple-digit rate rises, it will be interesting to see what the reaction is to another political event that hasn’t gone London’s way.

Concurrently many areas, particularly in market towns in the north and Midlands that voted Leave by large margins, may welcome the rate reductions as a first step in driving economic growth.

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