The upcoming “revaluation” of business rates by the Valuation Office Agency which is due to take place from the 1st of April 2017 could do some serious damage to a future of fibre optic broadband – specifically by hitting Virgin Media and BT with a £1.3bn tax hike on their existing infrastructure over the next five years. According to information from The Times, the extra cost is intended to represent a loss of investment that the operators believe would be enough to upgrade more than two-million current connections to superfast broadband.
Importantly, it seems that the tax hike will also have an impact on other operators within the fibre optic network too, such as City fibre, which has already commented that the current VOA system is broken. The huge tax hike could be a barrier to the UK’s broadband development, leaving more people than ever struggling to get their hands on the kind of fibre they need.
Positive Changes Promised by the Government
Despite these obviously upsetting changes, the Government has also proposed some positive adaptations to our path towards a fibre-optic friendly nation. For instance, they plan to provide 5-year relief from business rates on the new fibre-optic infrastructure, a system that is intended to run from the 1st of April, 2017. However, experts suggest that this will only lead to a saving of around £60 million – which seems like a lot, but is relatively small when you consider what the tax hike will do to the existing infrastructure.
The rate development has also overwhelmed the Government’s recent decision to invest £400m into a new Digital Infrastructure Investment Fund that’s intended to support alternative broadband ISP solutions. Even the former Digital Minister for the Government, Ed Vaizey has noted that the rates are going in the exact opposite direction of what had been planned in terms of a new era for faster broadband. It seems as though we’re being given small solutions from one direction, which are quickly overwhelmed by huge problems from the other.
It’s worth noting however that this revaluation effort will impact all the businesses running throughout England and Wales – or at least the ones that are paying business rates. The government has claimed that the process will be revenue neutral, which means that some businesses might see their rates going down, while others see their rates going up.
Who Knows What’s Next?
The developers in our country responsible for building digital infrastructure have often got to consider long-term methods of investment that work across periods of up to fifteen years at a time. This means that the 5-year rate holiday won’t really do much to act as a long-term incentive.
The hope for now is that the Budget 2017 announcement that will take place during March will help to produce some changes that could soften the blow for Broadband companies. Some improvements have already been suggested in this area, but it seems that large broadband builders will now be looking for new ways to establish and grow their businesses in a nation that seems to be working against fibre optic.
