'˜Too little too late' - how Yorkshire business reacted to rate relief package

Chancellor Philip Hammond sought to confront widespread concerns over the impact of business rate reform with a new £435m mitigation package to protect small firms.
Chancellor Philip HammondChancellor Philip Hammond
Chancellor Philip Hammond

The emergency relief package, larger than anticipated, won praise from some corners for its protections for those firms set to be hardest hit by business rate changes

But the Chancellor faced criticism for what many corners considered “a missed opportunity” to fix the system once and for all.

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The new measures will mean firms losing small business rate relief will see their bill increases capped at £50 a month and 90 per cent of pubs will be given a £1,000 discount on their business rates this year, while.

Philip Hammond also announced a £300m fund for local councils to provide “discretionary relief” to hard-pressed firms facing steep rate rises.

Pub groups and small businesses cheered the relief measures, but business bosses and experts urged the Government to carry out a “root and branch review” of business rates.

Gerald Jennings, Leeds Chamber of Commerce president, said: “This opportunity to fix the broken business rates system has been missed. Even with the measures announced today, improvement could still be a year away for some.

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“That said, support for those hit hardest by business rate rises is welcomed. We hope that the new discretionary fund for Councils to offer relief is rolled out quickly and effectively, but there is still a need for major reform of a broken system here. Tying in business rates to property values is an out-of-date way to fund local services and needs a big overhaul.”

Mr Hammond admitted there was scope to reform the revaluation process to make it “smoother and more frequent”.

He said the Government will set out its “preferred approach in due course” and consult on it before the next revaluation.

The Government has maintained that three-quarters of companies will see their rates fall or remain unchanged under the controversial changes to business rates.

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But the Institute for Fiscal Studies has estimated firms in London will see an average rise of 11 per cent over the next five years due to soaring property valuations in the capital, while rates in the North will fall by 10 per cent.

It is the first rates revaluation since 2010 and Communities Secretary Sajid Javid and Mr Hammond have come under pressure to help businesses facing large rises because they are in areas where rental values have increased dramatically.

Small retailers and pubs are among those who are facing the steepest hikes.

Alfie Stirling, IPPR Senior Economic Analyst, said the reforms were “too little, too late”.

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“For small companies struggling to cope with revaluations, we have seen only temporary and symbolic relief, but no structural reform of an archaic tax unfit for the digital age.

“For local governments struggling under the burden of social care need, there is no plan to make the devolution of business rates fairer. As a result services delivered by poorer councils outside of London will remain perilously expose by the end of this parliament, and regional disparities in care are likely to grow.”

Claire Paraskeva, senior director, business rates at GVA in Yorkshire, said: “Whilst his announcement claimed to give back £435m in additional relief to businesses this only equates to approximately 1.7 per cent of the total revenue raised from business rates of £25bn.”

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