Business rates are a “ticking time bomb”
In April 2017, businesses are expecting to receive the first indication of their new business rates following the latest revaluation.
Although many businesses are expecting small falls in business rates, around a third are expecting very sharp rises. Around a fifth of these, mainly located in the South East where property prices are higher, are expecting an immediate rise of more than 40 per cent.
This is despite Government proposals to use a £3.6 billion transitional fund, which has been saved by those on reduced rates, to help those on higher rates.
Revaluations are supposed to happen every five years, but the 2015 reset was postponed ahead of the last general election.
Many of the newest and biggest retailers like Amazon and ASOS are expected to benefit from reductions in rates on their out-of-town sites.
The Shadow Business Secretary, Rebecca Long-Bailey, has described the sudden rise as a “ticking time bomb” for small companies in England. She has suggested that businesses facing significantly higher costs should be offered immediate emergency help.
Ms Long-Bailey said: “The reality is that business rates are a ticking time bomb. It cannot be right for smaller town centre retailers to be facing massive hikes while the Amazons and ASOSs of this world have their business rates cut.”
Labour has put together an alternative plan that would include a fund worth £150 million a year for the next three years for small and medium-sized firms at risk of bankruptcy.
Labour has said that this funding should be distributed by councils under already established powers to provide discretionary relief, with the cost covered by central Government.
Labour has been joined by the Federation of Small Business (FSB) which is worried that half of those facing hikes will reduce, postpone or cancel investment, while nearly a fifth may be forced to close down or sell up.
The FSB’s survey of 675 members found that more than a third of small firms expected their rates to increase, with 44 per cent expecting bills to eventually rise by more than £1,000 a year.
FSB national chairman Mike Cherry said: “The costs of doing business for small firms are now at their highest levels since early 2014. The last thing we need is a business rates burden so heavy that it threatens the future growth prospects of our entrepreneurs.”