Treasury bows to pressure to ease burden on struggling firms and will introduce measures to save them billions of pounds in business rates
In a victory for The Mail on Sunday’s campaign to reduce business rates, the Treasury has bowed to pressure to ease the financial burden on struggling firms and will introduce measures to save them billions of pounds.
This newspaper – alongside major business groups – has long campaigned for rates in England and Wales to be reduced.
In a major policy decision the Treasury has now pledged to base future rises on a lower measure of inflation. ‘We are committed to switching business rates indexation from RPI to CPI from 2020 and will introduce legislation in due course,’ said a Treasury spokesperson.
Boost: The Treasury’s move follows demands from pressure groups for a fairer tax system to help businesses, beleaguered town centres and local shops
Campaigners have long complained that RPI rises faster than CPI, often outstripping growth. The effect has weighed heavily on town centre shops, which are struggling to compete with online firms.
The switch, which would have saved firms billions of pounds over the past decade, will be introduced in 2020. The move follows demands from pressure groups for a fairer tax system to help businesses, beleaguered town centres and local shops.
The business rates regime currently brings in £25 billion a year. The Treasury said the change would save companies £1 billion in the first three years. This would represent a £250 million saving for the retail sector.
Proposals to curb business rates were first announced in the March Budget last year, but the worsening economy and demands for an end to austerity led to fears among campaigners that the Government had lost its appetite for concessions. Many feared it had been dropped altogether when the Local Government Finance Bill failed to make it to Parliament. The Mail on Sunday has seen a letter sent to Chancellor Philip Hammond by ten of the country’s most powerful business
lobby groups, urging the Government to honour pre-Election pledges to take action. The letter, calling on the Government to switch to CPI, was signed by groups including the Confederation of British Industry, the British Chambers of Commerceand the British Retail Consortium.
Helen Dickinson, director-general at the British Retail Consortium, said dropping the switch would have had a ‘substantial detrimental impact’.
Mark Rigby, boss of business rates adviser CVS, said: ‘The Chancellor has moved quickly and decisively to quell speculation.’