The chancellor’s plans to allocate a nearly half billion pound package to ease the burden of a business rates revaluation does ‘little to ease the pain’, London council says.
As part of his Spring Budget announcement yesterday, Philip Hammond announced a £435m business rate package designed to ease the burden faced by small businesses in the upcoming rates revaluation.
Mr Hammond also announced local authorities would be able to access a £300m fund to support those hit the hardest. It is estimated rates in London will rise by 11% above inflation, while in the North they will fall by 10%.
Islington Council said the total business rates bill for its businesses will increase by almost £100m from April and warned the extra money for discretionary relief will ‘make very little difference’.
Cllr Asima Shaikh, Islington’s executive member for economic development, said: ‘Small businesses in Islington face massive central government increases in business rates bills from 1st April and today’s announcements by the Chancellor will do little to ease the pain.’
Members of the London Assembly also added their voices to the growing criticism of the chancellor’s business rates plans and warned they would have a ‘devastating’ and ‘disproportional’ impact on London’s businesses, high streets and night time economy.
Other measures announced by the chancellor included pubs with a rateable value less than £100,000 will also be granted a £1,000 discount – a measure that will aid 90% of pubs across the country.
He also said there will be a new cap preventing rates for businesses leaving small business rate relief increasing by more than £50 in the next year.
Cllr Claire Kober, chair of the Local Government Association’s (LGA) resources board and head of London Councils welcomed the extra funding but warned some councils could be left ‘out of pocket’ because an increase in business rates appeals.
‘We are pleased local authorities will be able to work with businesses in their local areas to identify those which need this new discretionary relief funding the most and that some pubs will receive business rates discounts,’ she said.
‘While measures announced today will not lead to any increase or reduction in funding for local government through business rates, there is a risk that some councils will be left out of pocket because of delays to billing caused by the lack of certainty about relief over recent weeks.
‘It is important that the Government reimburses them for any loss of income or extra costs incurred as a result.
‘Councils do not set business rates but any likely rise in appeals as a result of this latest revaluation will pose a risk to the funding of already-stretched local services.’
Cllr Kober said more than a million businesses have challenged their bill since 2010 and more than 200,000 appeals are yet to be decided. This has forced councils to divert £2.5bn to cover the risk of appeals, as they have to fund half the cost of any backdated refunds.
‘Local government will retain more of its business rates income by 2020 and could become liable for 100% of refunds,’ she continued.
‘This means a transparent and fair system of valuation and appeals is vital to provide greater certainty of cost and income to businesses and allow councils to release the money currently put aside to cover the risk of appeals to invest in vital local services.’
