Row over small business rates relief
The Government's proposals to 'ease the burden on small business by introducing relief from business rates' have been criticised by one small business association for 'failing to grasp the nettle'.
The new scheme will see rate relief available at 50 per cent for business properties with a rateable value of £5,000. Under the plans the relief will decline on a sliding scale as rateable value increases, reaching no relief at a rateable value of £10,000.
The plans were first announced in 2001 in the White Paper Strong Local Leadership - Quality Public Services when the proposals then were for thresholds between £3,000 and £8,000.
There is also a buffer zone so that business properties between £10,000 and £15,000 will not have to contribute to the relief.
Disproportionate burden
The Government recognised that the current system of business rates places a 'disproportionate burden on small businesses,' but small business lobby group, The Forum of Private Business, (FPB) claimed that the revised scheme only goes part of the way towards providing relief for more businesses in that some thresholds have been moved up only slightly.
Local Government Minister, Nick Raynsford, said: "Government recognises that the current system of business rates places a disproportionate burden on small businesses. The small business rates relief scheme will address that.
"These proposals are significantly more generous than those in the original white paper. However we estimate that the cost to larger businesses will add only 1.6 per cent to rate bills, well within the commitment we made that their bills would increase by no more than 2.5 per cent."
Sadly disheartened
The Forum of Private Business (FPB) has been campaigning for changes to the system and had hoped that the Government would at least introduce comparative thresholds to the scheme as it is administered in Scotland, to avoid creating an unfair competitive advantage for Scottish businesses.
The FPB said it was 'sadly disheartened' by news that the Local Government Minister, has 'again failed to grasp the nettle' on the proposed Small Business Rates Relief scheme and predicted this will affect most of the 3.8 million small and medium-sized businesses in England and Wales.
Andy Mowlah, Head of Research at FPB said: "After listening to all our evidence and hinting of much, Mr Raynsford has done much too little. The average business rate payer will still lose out as research commissioned by the Small Business Research Trust has indicated that the average Rateable Value (RV) for small businesses in England and Wales stands at £15,375 per annum. Under these circumstances FPB believe that the proposed system is not good enough and will give unfair advantage to Scottish businesses."
Rate relief will be available at 50 per cent for business properties up to £5,000, as compared to £3,000. The planned relief will decline on a sliding scale as RV increases up to £10,000. This effectively adds only £2,000 to each of these thresholds.
"The Government have seriously let small businesses down by creating a buffer zone incomparable to that implemented in Scotland. These proposals add a smaller buffer zone whereby business properties with an RV between £10,000 and £15,000 will not have to contribute. But, this compares badly to the working Scottish model, where businesses with an RV between £10,000 - £25,000 receive no relief but also avoid a surcharge."
It said that research showed that the average RV of small businesses in England and Wales is £15,375 per annum, therefore the scheme has the potential to result in over one million SMEs paying a surcharge because of their high average RV.
The FPB said: "If the UK Government adopted the Scottish 'buffer scheme' of £10,000 - £25,000 RV a significant number of SMEs, in the region of 90 per cent, would actually benefit from the scheme."