HUNDREDS of shops and offices are lying empty, depriving a council of millions of pounds in income.

More than 650 “business units” in Brighton and Hove are unused according to Government estimates.

This means Brighton and Hove City Council is expected to lose out on £2.9 million in income in the year leading up to March as 665 “business units” were vacant.

Richard Watts of the Local Government Association said business rates are “an extremely important source of income” for councils.

But British Retail Consortium property adviser Dominic Curran said the tax “disproportionately harms retailers”.

Brighton Tourism Alliance chairwoman Anne Ackord said these high rates and rents were a burden for businesses and the cause of many High Street shops lying empty.

“The Government has spent a lot of time talking about the revival of the High Street,” she said.

“But if you wanted to start up a shop tomorrow you’d have all sorts of rates and rents to worry about.

“If you’re a shop on the High Street, you don’t want an empty store next to you.

“It will be covered in graffiti and become a haven for the homeless.”

Ms Ackord said offering rent-free or rate-free time periods for businesses would be an incentive for start-up firms.

“We need to advertise what we’re going to do to help small businesses start up and medium businesses to grow,” she said.

“The exemptions for small businesses help, but it’s probably not publicised well enough.”

Last year a city council report claimed the authority faced a £15 million “budget gap” in the 2020/21 financial year, which begins in April.

Increased costs and a lack of central Government funding was blamed for the gap.

A Treasury spokesman said empty property relief was an incentive for property owners to rent out their units.

“Empty property relief strikes a balance between incentivising property owners to put vacant properties to use, while not penalising those who lose a tenant at short notice,” he said.

“Whilst the rate of business rates collection varies between individual authorities, the local government finance system has been designed so that business rates income is redistributed across the country according to the needs of local areas.

“We will announce further details of the business rates review in due course.”

So what are business rates and why are they so controversial?

When an office, shop, or factory is used by a business, the owner pays a tax - called business rates - set by the Government.

‘Standard’ businesses pay 50.4 per cent of the rentable value of their property in business rates with small businesses paying 49.1 per cent.

But if a “business unit” is not being used, the landlord of the property does not have to pay rates for three months.

As 665 units are estimated to be empty in Brighton and Hove, the city council is expected to lose out on £2.9 million this financial year compared to if those units were filled.

But many firms feel the “broken” rates system is the cause of shops lying empty because of the high cost to businesses.

“It’s a tax which disproportionately harms retailers, driving shop closures and job losses, leaving empty shopfronts and harming local communities,” Mr Curran of the British Retail Consortium said.

“It has been a challenging year for many retailers, as many shops struggle to adapt to rising cost pressures and changing consumer habits.

“It is essential the Government makes good on its pledge to reform this broken tax system.”

Though rates are paid to councils, 25 per cent of that money is then sent to the Government so it can redistribute the funds to areas in need.

But the Local Government Association’s Richard Watts believes councils should be allowed to keep all of their rates to fund their services properly.

“Councils want to see a business rates system which is responsive to local needs, fair to all and promotes growth,” he said.

“The Government must commit to moving forward with vital reforms.

“It should also introduce 100 per cent business rates retention, so that the remaining 25 per cent of business rates can be used to plug funding gaps.”

What do the experts say?

Public finance expert Dr Kevin Muldoon-Smith said councils “need business rates income to be stable” because of a lack of funds.

But businesses are arguing for the opposite, said the Northumbria University academic.

“Ideally the objective of businesses and local government should be developing the local economy, they should be united,” he said.

“But unfortunately we have this perverse situation where local government needs tax to go up and the business community are lobbying very hard for it to go down.

“Local government is very reliant on property tax and they’re going to have to be creative and careful in how they steward it.

“There’s a good chance that income will start to reduce.”