Retail chiefs hail Darling U-turn

Alistair Darling’s eleventh-hour decision to reduce increases in business rates has been welcomed by licensees and retailers who suffered with the disposal of transitional rate relief.

The Chancellor said yesterday (Tuesday, 31 March) that the 5% increase in business rates that comes into force today will be spread over three years, with a rise of 2% in 2009/10, followed by 3% over the next two years.

Alistair Darling said: "I am very conscious of the fact that businesses in this country were faced with an increase to business rates of 5% simply because the increase in business rates is linked to the rate of RPI inflation last autumn.

“But RPI inflation has now fallen to 0% in the last month and it is expected that it will fall further than that. So I want to bring forward a measure that will help businesses.”

The sector has welcomed the Chancellor’s recognition of the troubles facing retailers and other small businesses in these difficult times, but warned that although the timing of the rate increases has been changed, the long-term outlook remains the same.

Stephen Robertson, director general of the British Retail Consortium, said: “It’s come at the last minute but the Government’s recognition that piling on a massive extra £250 million 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 five per cent increase was unjustifiable.

“Allowing businesses to postpone the extra costs from ending the phasing in of the 2005 revaluation scheme will be particularly helpful for smaller retailers. Many were struggling to prepare for a painful hit from increases over and above the basic five per cent planned.

“But the Chancellor has only taken a first step. The timing has changed but the eventual costs haven’t. He still plans business rates increases totalling £1.6 billion by 2010/11, that’s thirty per cent more.

“The government must reintroduce empty property rates relief and remove the serious threats that remain from the impact of 2010 revaluation and Business Rates Supplements.”

James Lowman, chief executive of the Association of Convenience Stores, added: “Business rates are the third biggest cost for convenience stores, so this eleventh hour decision will provide some relief to local shops.

“However, we remain concerned at the impending costs associated with the 2010 rate revaluation which will heap further costs on local shops, and the supplementary business rate which will give councils more powers to raise money from business rate payers.

“Today’s announcement should be the first step towards a fairer rates system for businesses.”

Alan Lodge, 01.04.2009