Business Secretary Vince Cable is believed to be pressing hard behind the scenes for a shake-up of the business rates system. Following a wave of retailers entering administration since the turn of the year, Mr Cable is urging Chancellor George Osborne to extend rate relief for small businesses beyond 2014 in next week’s budget.
However, Mr Cable would like to go much further than rate relief or the freeze called for by the British Retail Consortium (BRC) and is urging government colleagues to consider overhauling the rates regime to help the struggling high street.
One of his suggestions is that a higher rate should be charged on out-of-town retail developments, although this is expected to be resisted by Communities Secretary Eric Pickles. He will argue that this would lead to the increase being passed on to the consumer, putting added pressure on already stretched household budgets.
Mr Cable remains unhappy about the decision to delay the next rates revaluation until 2017. This means bills will be based on pre-financial crisis commercial property values that do not reflect the current market. The Business Secretary is still hopeful that this issue may be revisited and will continue to urge a rethink.
Another option that the government could consider is the recommendation contained in the Portas Review that local authorities should be encouraged to grant business rates concessions to new businesses under discretionary powers.
With business rates bills due next month, it appears Mr Cable is running out of time to persuade his colleagues to make major changes to the system this year. But with the Chancellor said to be “alert to the issue” a further extension of small business rates relief in the budget is a distinct possibility.
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