Government accused of '˜sticking plaster' solutions as Prime Minister weighs-in on business rates row

The Communities Secretary Sajid Javid has hinted there is more support is in the pipeline for companies worst-affected by the recent shake up in business rates, as the Prime Minister weighed-in to defuse an impending party row.
Communities Secretary Sajid JavidCommunities Secretary Sajid Javid
Communities Secretary Sajid Javid

Addressing the Commons this afternoon, Mr Javid revealed that he is working closely with the Chancellor to provide additional support for firms facing the “steepest increases” in their bills, with details expected to be announced in next month’s Budget.

The statement followed an earlier intervention by Theresa May, who told MPs during Prime Ministers questions that she had asked the Treasury to ensure there was “appropriate relief” in place for the “hardest cases”.

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But the assurances were not enough to silence some Tory MPs, who continued to voice concern about the impact on small and independent businesses, while Labour and Lib Dem critics accused ministers of offering “sticking plaster” solutions to fix a “broken system”.

Yesterday’s announcement follows reports of growing dissent among backbench MPs in response to a revaluation of business rates which will see some companies face an increase of up to 400 per cent.

There is particular concern that many smaller, independently-run high street firms will bear the brunt of any tax increase, while many of the large out of town superstores and warehouses will enjoy cuts.

Mr Javid provoked a further backlash from MPs with a letter he wrote at the weekend, in which he suggested the impact on businesses had been exaggerated and the shake-up constituted “the biggest ever cut in business rates”.

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This left the Chancellor Philip Hammond to placate MPs during a meeting of the 1922 Committee on Monday, in which he reassured them he was “in listening mode”.

The issue was raised again at this week’s PMQs, with Green MP Caroline Lucas warning that the “hike” in rates could “devastate the local economy” in her Brighton constituency.

She urged the Prime Minister to commit to a “discretionary fund” for small and micro-businesses and a “full review” of the whole rates system.

Mrs May replied that the current revaluation was crucial to ensuring the system was fair, and pointed out that the Government has already set up a £3.6bn relief fund to ease the transition.

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But she added that she had also “asked the Chancellor and the Communities Secretary to ensure that there is appropriate relief in those hardest cases”.

A Downing Street spokesman later denied that this “appropriate relief” would mean any additional funding for affected businesses.

But a subsequent statement by Mr Javid prompted fresh speculation about the possibility of a further transition fund to be announced in the March Budget.

He told MPs: “We have put in place a £3.6bn package of transitional relief to help more than 140,000 smaller businesses. But, as colleagues and the media have highlighted in recent days, there are clearly some individual businesses facing particular difficulties.

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“I am working closely with... the Chancellor to determine how best to provide further support to businesses facing the steepest increases. We expect to be in a position to make an announcement at the time of the budget.”

Responding to the news, the Tory MP for Broxtowe, Anna Soubry, argued that while some businesses “will undoubtedly benefit” from the changes, smaller firms – and in particular pubs – could face an “unbearable” rise in rates.

Meanwhile, speaking to the Yorkshire Post, the Labour MP for York Rachael Maskell said some businesses in her constituency are facing a 50 per cent increase in bills.

“The vast majority of [businesses] will certainly be punished under this,” she said.

“Transitional money... comes and it goes – its a sticking plaster for a broken system. The system has got to change.”