The retail trade has welcomed the decision by Chancellor Alistair Darling not to increase business rates by 5% from today
The planned rise was linked to RPI (Retail Prices Index) by the chancellor last year, but RPI earlier this month fell to zero percent.
As a result, businesses will only face a 2% rise this year, with the remaining 3% gradually brought in over the next two years.
The chancellor’s last-minute decision not to increase business rates by the full 5% was described as “good news” for beleaguered retailers by the British Retail Consortium (BRC).
BRC director general Stephen Robertson welcomed the announcement as Government recognition that these are tough times for retailers and a good first response to BRC campaigning over the last six months.
But, retailers still face a £100m increase to their bills from today and there has been no change to the overall £1.6bn increase in business rates bills that retailers face by 2010/11.
Robertson said: “It’s come at the last minute but the Government’s recognition that piling on a massive extra £250m business rates burden in a recession would seriously harm hard-pressed retailers is welcome.
“With RPI inflation at zero, and expected to turn negative later this year, a 5% increase was unjustifiable,” he said.
CBI director general Richard Lambert said: “Although this change will not reduce the tax burden on companies, it will allow them to pay the 5% increase over three years instead of one.
“This is a step in the right direction, helping companies at a critical time by improving cash flow.
“We are also pleased that the change will defer increases due to transitional rate relief, which had threatened some companies at a difficult time.
“We welcome the announcement, but have been campaigning for a two-year freeze on business rates, instead of the 5 per cent rise that is still being applied over time.”
