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Government backtracks on business rates rises

22 February 2017 by
Government backtracks on business rates rises

Government ministers are set to retreat over the controversial revaluation of business rates set for April this year, after a revolt by Conservative MPs.

Chancellor Philip Hammond is considering extra funding to help independent retailers and small businesses after warnings that some could see huge increases in the rates that they pay.

Communities secretary Sajid Javid is expected to tell MPs that he understands the concerns and that the government will help the hardest hit, according to The Telegraph.

It marks a turnaround from his tone at the weekend when he said that criticism of the changes to business rates was a result of a "relentless campaign of distortions and half truths".

The news came as 29 hospitality business bosses signed a letter published on the letters page of The Telegraph today in which they warned that pubs and restaurants were "the only business sector facing massive business rate increases in every British region".

Pointing out that hospitality businesses are "truly regional", signatories including Steve Richards, chief executive of the Casual Dining Group; David Campbell, CEO of Wagamama; and Patrick Dardis, CEO of Young's; highlighted the fact that the sector directly employs 1.5 million people. "We already contribute over £18b in taxes and bear a disproportionate business rate burden. The proposed changes will increase that disparity by £500m, hitting jobs and halting investment," they said.

Meanwhile, Scotland's finance secretary Derek Mackay yesterday announced a 12.5% cap on business rates rises for hospitality firms in Scotland. It is expected to apply to around 8,500 firms in the hospitality sector.

Kate Nicholls, the chief executive of the Association of Licensed Multiple Retailers (ALMR), which has been campaigning hard on the issue of business rates, said: "These moves by the Scottish and Welsh Governments are a good first step in recognising that hospitality businesses are being unfairly treated by a system that does not work. Westminster must follow this example with sector-specific relief for pubs and bars that are uniquely disadvantaged by this totally unsuitable system.

"The Government needs to act quickly to address this by reinstating high street relief or establishing a separate hospitality relief for pubs, bars and restaurants that contribute so much and are unfairly burdened. The Government must also ensure that businesses have a guaranteed right to appeal and a process that is effective, accurate and fair.

"The Treasury has already announced it stands to collect £1billion extra following the revaluation so any immediate reliefs need not be a drain on the country's finances. Scrapping business rates cuts for corporate giants and warehouse-based businesses would also begin to rebalance the scales and ensure some fairness in the system; a tactic supported by a number of Conservative backbench MPs.

"Action by the Government at the Budget can bring stability for businesses in the short term as they navigate the new rates. We can then begin to look ahead at fundamental reform of the rates system to guarantee fairness for hardworking businesses."

Scottish government caps business rate rises at 12.5% >>

Business rates changes ‘nothing to be afraid of' >>

Business as usual? How will the change in business rates affect you? >>

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