Sajid Javid: Budget help for firms hit by rates rise

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The government has promised measures in the Budget for firms facing the "steepest increases" in business rates.

Communities Secretary Sajid Javid said it was "clear to me that more needs to be done to level the playing field and make the system fairer".

A fierce campaign has been waged against rises, which ministers say will affect a quarter of business in the UK.

Labour said the government had allowed a "crisis" to develop. The rate change is due to happen on 1 April.

Businesses pay tax based on the rateable value of their property, including pubs, restaurants, warehouses, factories, shops and offices - and these values are being reassessed for the first time since 2010, meaning changes to the amount many firms will pay.

In the face of opposition from business groups and some Conservative MPs, the government has defended the reforms and said 2017-18 "will see the biggest ever cut in business rates" and "three-quarters of all businesses, right across the country, will see their rates either fall or stay the same".

But Mr Javid told the House of Commons he was "acutely aware" of problems for some others, saying: "There are clearly some individual businesses facing particular difficulties."

He added: "I have always listened to businesses and this situation is no exception. It's clear to me that more needs to be done to level the playing field and make the system fairer."

Mr Javid promised help for those "facing the steepest increases".

Business rates explained

  • Business rates are a tax on non-residential property such as pubs, restaurants, warehouses, factories, shops and offices
  • The amount businesses pay is based on how much annual rent could be charged on the premises, which is known as the rateable value
  • This is combined with the "multiplier" - a figure set by the government each year - to determine the final bill
  • The Westminster government's revaluation, the first since 2010, applies to premises in England
  • Revaluations are also taking place in Scotland and Wales, and Northern Ireland carried out one in 2015

He added that he and Chancellor Philip Hammond were looking at "how best" to proceed, telling MPs: "We expect to be in a position to make an announcement at the time of the Budget in just two weeks' time."

At Prime Minister's Questions earlier, Theresa May was asked about the changes by Green Party MP Caroline Lucas, who said the changes would "devastate" the economy in her Brighton Pavilion constituency.

The prime minister said it was "right" for rates to change to reflect changing property prices, saying the system was underpinned by fairness.

Media caption,

Theresa May offers promise of help on business rates

She added: "We also, though, want to support businesses and recognise that, for some, business rates will go up when these revaluations take place."

Mrs May also said there was "significant funding in place for transitional relief". For Labour, shadow communities secretary Gareth Thomas said there was a business rates "crisis", saying it had taken Mr Javid "apparently until now to grasp its seriousness".

Asked whether the government was in "chaos" over business rates, the prime minister's spokesman said: "I don't think it is chaos. We've set out our plans to provide a transitional relief fund to make sure that those affected by the rise in business rates have a smooth transition."

He later added: "The PM was absolutely clear today that there is a transitional fund already in place - and that she has asked the chancellor and the communities secretary to make sure that this is being spent appropriately.

"She also asked them to work to ensure that there was appropriate relief in place for the hardest cases.

"Sajid echoed this exact statement this afternoon - and made clear that we will come back to this issue at Budget. We would never confirm or deny what would be in the Budget this far in advance."

The chairman of the Treasury Select Committee, Conservative MP Andrew Tyrie, has written to the chancellor to ask for "the facts" about the changes.

He said there were "several problems" with the proposals, citing "considerable concern" about the impact on smaller firms.

The Federation of Small Businesses said it welcomed the PM's "intervention" to tackle what it called an "extremely worrying situation for many small businesses".