"Squeezed business struggles to pay rates"

You'd expect slightly more incisive commentary from the FT, which is supposed to be the economically clued up paper, but here goes:

Companies hit by the economic downturn are struggling to pay their business rates on time, adding to evidence of the economic squeeze on business. More than half of councils surveyed by the Local Government Association said companies were experiencing difficulties. The association estimates that business receipts [sic] – which councils collect and send to central government for redistribution – have fallen by more than £1bn ($1.6bn) in the year to April, representing about 6 per cent of takings. They are expected to deteriorate even further in the coming year.

Again, this is easily fixed.

1. Business Rates should be replaced with Site Value Rating, which does not distinguish between undeveloped sites, vacant or derelict buildings or well maintained and fully occupied ones (so as not to discourage owners from maximising the return on their sites).

2. SVR should be collected directly from the landlord, not the occupant. The landlord will in most cases increase his rent to cover the extra cost, but this does not change the total occupancy cost to the tenant. As SVR will only ever be a fraction of the rental income (Business Rates averages out at 30% to 40% of rental income, for example), there is no question of the landlord being unable to pay.

3. Of course, owners of undeveloped sites or vacant derelict buildings will have no current income, but this will be reflected in a much lower cost/value of the land element when the site or building is acquired, giving a lower up-front fixed interest costs, leaving the purchaser with more funds to develop the site.

4. In the very short term, this will not necesarily help the tenant of course, because he still has to cover the increased rent. So he will just have to negotiate a reduction; faced with more competition from other landlords and potential landlords, a fixed SVR bill and a lower tax rate on the actual buildings, there will be more incentive to develop and keep up occupancy rates, and more competition between landlords, so the chances are, the tenant will find it easier to negotiate a reduction in difficult times.

5. A further tweak is this. Business rates, "which councils collect and send to central government for redistribution", should be collected locally and spent locally. How else is a council supposed to be forced to operate any sort of sensible cost-benefit analysis?

That's that fixed. Next.