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Business rates "not fit for purpose", say MPs

A government Select Committee report on the retail sector has called for radical changes to business rates, describing the current system as "one of the principal threats to the survival of existing retail businesses in the high street".

Produced by the Department for Business, Innovation and Skills (BIS), the report concludes that business rates are also "the biggest obstacle to new retail businesses starting up".

Committee chairman, Adrian Bailey MP, said: "Business rates, in their current form, are not fit for purpose. The government needs to carry out a wholesale review of the current business rate system."

He added: "While this is a matter for the Treasury, the Department for Business, Innovation and Skills needs to play a leading role in that review, to reflect the needs of businesses. It needs to impress upon the Treasury and the Department for Communities and Local Government the importance of the retail sector as a driver of economic recovery. This is especially pertinent for small and medium-sized businesses."

The report recommends that a review of the business rate system should consider:

  • whether retail taxes should be based on sales, rather than on property;
  • whether the retail sector should have its own form of taxation, calculated in a different way from other businesses;
  • how frequently the revaluation of business rates should take place.

Dr Adam Marshall, executive director of policy at the British Chambers of Commerce (BCC), said: "It is good to see Parliament recognise that Britain's business rates system is broken and in need of fundamental reform. But politicians must remember that the business rates system is failing all of our businesses – not just the high street.

"Businesses are suffering from this pernicious tax, which gobbles up huge amounts of cash before a company even turns over a single penny, in city centres, industrial estates and office parks. Business rates are also the reason many manufacturing and services companies put off investment and hiring decisions."

Helen Dickinson, director general of the British Retail Consortium said: "This report must be the final nail in the coffin of the question: do business rates need to be reformed?"

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More SMEs taking on apprentices in 2014

As this year's National Apprentice Week comes to an end, new research shows that small businesses are planning to create thousands of new apprenticeships in the next year.

A study of 600 British businesses by ICM reveals that one in five SMEs plan to take on one or more apprentices in the next 12 months. This goes up to 39% over the next five years. This compares to 15% and 34% of SMEs, when asked the same question in February 2013.

Over a quarter (29%) of the SMEs that plan to take on apprentices say this is because they are a core part of their growth strategy. And 43% of employers say they would be more likely to offer an apprenticeship than they were two years ago.

Vince Cable, secretary of state for business, innovation and skills, said:

"It's especially good that so many SMEs are embracing apprenticeships in the coming years and that apprentice recruitment now forms a key part of businesses' plans for sustainable growth."

Government funding is available to help firms take on a 16-24 year old as an apprentice. The Apprenticeship Grant for Employers (AGE) is open to businesses employing up to 1,000 people who have never employed an apprentice before or have not recruited one in the past 12 months.

However, AGE is set to end in December 2014. This week, the British Chambers of Commerce (BCC) has called on the chancellor to use his spring Budget to announce a two-year extension to the Apprenticeships Grant for Employers scheme. It has highlighted the fact that demand from young people for apprenticeship places continues to outstrip supply – by as much as 12 to one.

Nora Senior, BCC president, said: "Apprenticeships give young people the opportunity to learn a new skill, and give businesses the opportunity to teach them a trade that is specific to their business.

"However, hiring younger workers without a track record is a large commitment for a company. There are things that government can do to encourage businesses to invest in someone who is less experienced – starting with a commitment to extend the successful Apprenticeships Grant for Employers scheme, which is set to end in December 2014 if ministers don't act now."

Related resources:

  • Could taking on an apprentice give your business a £2k boost? BLOG
  • What makes a great small business employee? ARTICLE
  • Why your business should hire an apprentice BLOG

Fewer "sickies" not necessarily a healthy sign

The number of sick days taken by UK employees fell by 131 million days last year to 4.4 days per worker, according to the latest figures from the Office for National Statistics (ONS).

This represents a continued downward trend in sickness absence. However, the Chartered Institute of Personnel and Development (CIPD) has questioned whether this drop hides a rise in presenteeism and has suggested that the fall is down to employers getting tougher on absence rather than healthier employees.

According to the CIPD, sickness absence at work has fallen by nearly a third compared to a decade ago, when the average worker took 7.3 days off sick per year. The main causes of sickness are musculoskeletal conditions, followed by minor coughs and colds and anxiety/depression.

Ami Naru, employment specialist at law firm Irwin Mitchell, said: "Employers have toughened up in terms of policing sickness. The fall in sickness absence, although welcome news, will therefore probably not come as a surprise to those prudent employers who have such policies in place."

Interestingly, workers aged 16-24 – a group often blamed for taking too many "sickies" – actually took the fewest number of days off ill.

Frances O'Grady, TUC secretary general, said: "These figures prove there is no such thing as a sickie culture."

However, she said the figures could mask a more worrying trend: "The real health threat we face is the growing culture of presenteeism, where unwell staff are pressured into coming to work by their bosses."

This concern was echoed by former CIPD chief economic adviser, Dr John Philpott, now director at The Jobs Economist. He said: "Although the overall rate of sickness is down, more working days are being lost to the common mental health problems of stress, depression and anxiety. The 15.8 million days lost here in 2013 was up from 11.8 million days lost in 2010."

Related resources:

  • How to manage absenteeism CHECKLIST
  • The lawyer's guide to skiving BLOG
  • Sickness issues and SSP BRIEFING