BT outlines impact of UK business rates reform on infrastructure investment and growth

BT is dedicating approximately £5 billion annually to advance digital connectivity within UK communities, with total investments exceeding £24 billion this decade. These efforts aim to maintain and develop networks serving households, businesses, and public services across the country.

The company’s ongoing financial commitments are intended to support nationwide connectivity and contribute to economic activity. However, proposed modifications to the UK business rates system introduce uncertainties regarding their effects on infrastructure investment, with discussions ongoing with the Valuation Office Agency and pending decisions at the forthcoming government budget.

The current business rates structure taxes commercial properties while also affecting physical infrastructure assets such as fibre cables, ducts, telephone exchanges, and mobile masts. The government plans to abolish the Valuation Office Agency, transferring its responsibilities to HM Revenue and Customs, with the potential to create a more transparent system. Additionally, a new reform proposes higher rates on properties and infrastructure valued above £500,000 to finance reduced rates for retail, hospitality, and leisure sectors.

Analysis indicates that these reforms could impose disproportionate costs on infrastructure providers, possibly amounting to an additional £400 million annually, while distribution warehouses associated with online retailers may contribute comparatively less. Such outcomes may reduce investment in critical infrastructure sectors, potentially diminishing economic growth and affecting public services reliant on this infrastructure.

John Petter, BT's chief customer and regions officer, said, “Business rates reform is overdue – and we all agree the high street needs support. But reform must be done in a way that supports vital infrastructure investment rather than thwarts it.” He added, “BT is investing more than any other FTSE business into the UK – over £24bn so far this decade. While we’re making great progress, it’s far from job done. We plan to invest billions more before the end of the decade to build a better BT for customers and fuel growth across the country.”

The company’s report projects that the proposed business rates changes could reduce investment by £1.4 billion over five years and decrease the UK economy by £1.5 billion annually, effectively resulting in a net fiscal loss. BT has called for targeted relief measures and potential exemptions or caps on higher rates for large infrastructure properties to mitigate adverse effects on investment while continuing to fund support for retail and related sectors.