In recent months, the campaign to freeze business rates, or overhaul the system entirely, has been stepped up by retail and property bodies as Chancellor George Osborne prepares to release the details of his Autumn Statement.
However, the BBC has learned that, rather than acquiescing to these requests, Mr Osborne intends to place a cap on future rises – giving a little leeway to struggling businesses but falling short of what many had hoped for.
According to the BBC, Mr Osborne will place a cap of 2 per cent on business rates rises in England and Wales next year rather than continuing to link increases to the inflation rate.
This means that the planned rise of 3.2 per cent which was due to come into effect in April will not go ahead, but costs will still increase by 2 per cent for businesses operating from rateable properties.
Additionally, he is expected to extend an existing programme designed to offer relief on business rates for small businesses in a bid to speed up growth in the economy.
The British Retail Consortium (BRC) has welcomed the news, saying that it will allow more shops to remain open and safeguard around 7,500 jobs. However, it has repeated its call for a total reform of the business rates system which it describes as unfit for purpose.
Unfortunately, the BRC’s long term goal is not expected to be addressed in the near future, meaning that subsequent rates increases may, once again, be linked to inflation.
Statistics show that around one in seven businesses have received summonses regarding unpaid business rates in the last year. Furthermore, business rates are now beginning to overtake rents as the biggest cost faced by small retailers.
With many retailers claiming that expansion is being hampered by business rates and others struggling to survive, Mr Osborne may find his well-intentioned cap of 2 per cent will not be as popular as he hopes in the long term.
And with fellow cabinet member, Business Secretary Vince Cable, also adding his voice to the numbers calling for an overhaul of the system, it seems that Mr Osborne will remain under pressure to act following today’s announcement.
Do you think Mr Osborne has done as much as he can for small businesses by capping rates rises, or should he take the views of industry bodies on board and launch a review of the business rates system?
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