ACS

At the opening of an opposition day debate opposing the impending 5% rise in business rates and the end of transitional rate relief, Shadow Communities Minister Bob Neill told the Commons that businesses are caught in a “deadly pincer movement” which could see firms shut down and jobs lost as the recession deepens.

Neill told MPs that the government was imposing increased costs and regulation on businesses at the same time as it was failing to get credit flowing again.

He pointed to a “double whammy” of business rate increases on the horizon which were going to threaten the ability of firms to survive the downturn. He was opposing the impending 5% rise in business rates and the end of transitional rate relief, which the Tories say will mean “soaring bills” at a time of deflation and recession.

The Conservatives also want to see small business rate relief made automatic, as opposed to the current system where they have to apply to local authorities for it. It is already paid automatically in Wales. Neill said the English system placed unfair administrative burdens on firms and councils, and it would not take long for the Government to act if it wanted to. Neill said the government was failing to deliver the “real assistance” to small businesses it had promised.

Under questioning from the opposition, John Healey Minister for Local Government, Department for Communities and Local Government admitted that under the current system business rates would fall if the RPI was at a negative level: “As the system stands if the RPI in September is negative then that would be the effect on the business rate multiplier for the following year.” He said.

Healey also said the next revaluation was due in April 2010 but it would not raise extra business rate revenues. There would be transitional arrangements to phase in big increases, he assured MPs.

For the Liberal Democrats, Lorely Burt attacked the decision to put up business rates by over 5% at a time of downturn. Burt said the Tory motion was going in the right direction but “tinkering at the edges” of the problem. There needed to be a “proper relationship” between local government and businesses.

“Businesses might be more willing to pay if they felt they had some say in the matter.”

Andrew Selous, Conservative MP for South West Bedfordshire, called for a range of measures to ease the burden on small firms, telling ministers: “I don't think the Government have grasped the fact that many of these small businesses in particular will not be around to pay business rates in future unless we can do something now.”

The Tory motion stating that the government's policies on business rates are “harming local firms during the recession” was defeated by 297 votes to 220, Government majority 77.