ACS

The Local Government Association (LGA), which represents councils in England, is warning that some firms are set to be hit by rate bills that will be doubling or tripling because a programme of Government rate relief is coming to an end.

Business rates are reassessed every five years by the Government and firms that see sharply rising bills are eligible for transitional relief totalling £100m a year. However, this scheme is due to come to an end across the country from 1 April, affecting thousands of firms that have been paying reduced bills for years and in some cases for decades.

Levels of business rates are set by the Government. Councils collect the rates which are then redistributed to local authorities.

The LGA is calling for:

• The extension of the relief to protect the businesses that have been worst affected and that are at danger of going bankrupt resulting in job losses.
• A radical overhaul of tax breaks for small businesses that would see them receive rate relief automatically that currently goes unclaimed.

LGA research shows that:

More than half of all councils (56%) are reporting that firms in their area are having difficulty paying business rates to local authorities. Eight out of ten councils are reporting an increase, or anticipated increase, in businesses requiring support.

Cllr Margaret Eaton, Chairman of the LGA, said: "Bills are starting to drop on businesses’ mats and up and down the country and some are telling councils that they simply won’t be able to pay. It's unacceptable that some businesses could see their rates bills double or even triple.

"It’s clear that a decision about ending this relief was made whilst the economy was still booming and it was thought that businesses would be able to cope. In the new environment, it’s just not realistic to expect many businesses to deal with this sharp rise in their bills.

"Ministers should consider extending the relief for firms that are going to be the worst affected by this change to prevent jobs from being lost. The recession is claiming around 85 small businesses every day and many need every single last bit of help and support to get through tough times.

"Every effort must be made to make sure that even more businesses don’t go to the wall, creating unemployment and scarring our high streets with more empty shops.

"The importance of small businesses to a thriving local economy cannot be underestimated, stimulating employment and keeping money flowing into local areas. Independent retailers such as newsagents, hairdressers and corner shops are the lifeblood of local areas."