Chancellor Jeremy Hunt refused to confirm what he would do on business rates at the weekend (James Manning/PA)
(Picture: PA Wire)Business leaders have issued a last ditch appeal to Chancellor Jeremy Hunt to freeze business rates in this week’s Autumn Statement, saying a 10 per cent hike next year could leave many firms on the brink of collapse.
As Mr Hunt weighs a slew of tax rises and spending cuts on Thursday to plug a £55 billion black hole in the public finances, business groups fear the Chancellor will raise rates in line with inflation to provide a £3bn boost to tax revenues.
The benchmark CPI measure of inflation hit 10.1 per cent in September and could rise further when latest figures are released on Wednesday.
For many businesses, raising rates by that amount would contribute to a perfect storm, with energy bills support set to end at the same time along with a 50 per cent rates relief holiday for the retail, hospitality and leisure sectors.
Tina McKenzie, from the Federation of Small Businesses, said firms were facing a “cost of doing business crisis” as rents and energy costs soar.
“If rates soar too, all three combined will likely prove unmanageable for many firms, making them unviable,” she warned.
“Small businesses certainly aren’t able to increase their budgets with inflation – in fact, over two-thirds told us their revenues were stagnant or even decreased in the last quarter.”
Kate Nicholls, Chief Executive of UK Hospitality, said: “London hospitality businesses have been worst affected by Covid – hit first, hit hardest and hit longest – with the capital yet to fully recover.
“On top of that, they now face the highest business rates bills in the country kicking back in full from April. We have already seen 20 per cent of businesses in Central London close and without an extension of rate relief holidays we fear this will only accelerate, damaging London’s reputation as a world class destination.”
And Richard Burge, Chief Executive of the London Chamber of Commerce and Industry, said: “We urge the government to work on a long-term, strategic plan for taxation and business rates in order to alleviate the cost of doing business crisis.”
Rishi Sunak – then Chancellor – announced a freeze on business rates in last year’s Autumn Statement at a cost of £4.6bn over the five years to 2026. The 50 per cent rates relief for the leisure, hospitality and retail industry cost £1.7bn.
The Treasury said it wouldn’t comment on speculation ahead of Thursday’s fiscal event but said all taxes were being kept under review.
A spokesperson added: “The UK is not immune to the global economic challenges, but our priority is bearing down on inflation and maintaining economic stability.
“The Prime Minister and Chancellor have been clear that this will require some difficult decisions but protecting public services and the most vulnerable will be prioritised.”
At the weekend the Chancellor refused to confirm what he would do on business rates, telling The Sunday Times: “I can’t tell you what I’m going to do on business rates, but what I can say is that I think businesses want certainty about what the government’s going to do so they understand where they stand.”
Labour’s Shadow Business Secretary Jonathan Reynolds said: “Far too many businesses have not broken even since Rishi Sunak became Chancellor. Now as PM he wants to hike business rates at the worst possible time.
“Labour has a plan to back British business. Labour will cut business rates for small firms and replace business rates with a fairer system to ensure business can invest for the future.”
A revaluation of business rates is also due to kick in next year which could leave firms in parts of the country where property values have risen more than others facing another costly increase.
