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Theresa May promises help for firms hardest hit by business rates change Chancellor to announce measures to help small firms with business rate rises
(about 2 hours later)
Theresa May has asked senior ministers to assist companies most adversely affected by the imminent change in business rates, she has told prime minister’s questions, following concern about the process among Conservative MPs. The government will offer extra help for small firms affected by an imminent change to business rates, the communities secretary has announced, saying more should be done “to level the playing field”.
May told the Commons she had asked the chancellor, Philip Hammond, and the communities secretary, Sajid Javid, to make sure a relief fund was targeted at those businesses most in need. Following increasing concern from some businesses and Conservative MPs about the impact of the first business rate revaluation in seven years, Sajid Javid said the chancellor, Philip Hammond, would announce new measures at the budget on 8 March.
While Downing Street later stressed that this did not mean any extra money on top of a previously announced £3.6bn transitional fund, the prime minister’s comments indicate the seriousness with which she is treating worries about the revaluation. This would form part of a wider and longer-term re-examination of the business rates system, Javid added.
The overhaul of the business rates system will base them on the latest rental value of properties, meaning the biggest rises will happen in places such as London and other areas in the south-east, where rents have risen sharply in recent years. The announcement follows a pledge from Theresa May at prime minister’s questions that small businesses left with the highest rate increases would be helped.
Also on Wednesday, Andrew Tyrie, the Conservative MP who chairs the Treasury committee, wrote to Hammond seeking clarification on some parts of the revaluation, particularly whether out-of-town businesses were benefitting at the expense of smaller, urban firms. May’s spokesman said this was not a pledge to spend more money on rate relief. But following Javid’s statement his department said it would be revealed at the budget whether the current £3.6bn fund for transitional relief would be increased.
Speaking during a wider Commons debate on local government finance, Javid said the rates revaluation would see three-quarters of all businesses pay the same amount or less than before.
“I am also acutely aware of the impact on the quarter that will see increases,” he continued. “If your rates are going up, it’s no consolation to hear that others’ will be going down. I’ve long recognised the need to provide support.”
The transitional relief fund would help more than 140,000 smaller businesses, Javid said, adding: “But as colleagues and the media have highlighted in recent days, there are clearly some individual businesses facing particular difficulties.”
Javid said a particular problem was faced by smaller shops in areas that have seen high increases in rent – the rates are based on rentable values – and by firms facing “an alarming cliff edge” after losing their entitlement to rates relief.
“I have always listened to businesses, and this situation is no exception,” he said. “It’s clear to me that more needs to be done to level the playing field and to make the system fairer.
“I’m working closely with my right honourable friend the chancellor to determine how best to provide further support for businesses facing the biggest increases. We expect to be in a position to make an announcement at the time of the budget in just two weeks’ time.”
Asked whether there was scope for a more fundamental review, Javid said there was “clearly some room for improvement”, for example in helping smaller shops thrive in a world of online retail.
“Nobody would argue that the current system is perfect, and it is right to ask whether the time has come for some kind of reform,” he said.
“We’ll be looking closely at all possible steps for making it fairer and more sustainable in both the short term and the long term.”
The announcement follows a letter sent to Hammond by Andrew Tyrie, the Conservative MP who chairs the Treasury committee, seeking clarification on some parts of the revaluation, particularly whether out-of-town businesses were benefitting at the expense of smaller, urban firms.
The letter asks Hammond to give figures on the proportion of small, medium and large businesses facing a rise or fall in business rates.The letter asks Hammond to give figures on the proportion of small, medium and large businesses facing a rise or fall in business rates.
The delay since rates were last reassessed “was bound to store up trouble”, Tyrie said. “For businesses whose properties have increased disproportionately in value over the last seven years, the increases may be painful.”The delay since rates were last reassessed “was bound to store up trouble”, Tyrie said. “For businesses whose properties have increased disproportionately in value over the last seven years, the increases may be painful.”
Caroline Lucas, the Green MP for Brighton Pavilion, asked May at prime minister’s questions whether she would review the rates upheaval, saying some small businesses in her constituency would face increases of up to 400%. At prime minister’s questions, May said she had asked Hammond and Javid to make sure relief was targeted at those businesses most in need.
May defended the overall aim of the process, saying rental values of properties did move over time. “It’s right that rates change to recognise that,” she said. “That’s the principle of fairness that underpins the business rates system.” The overhaul of the business rates system will see the biggest rises happen in places such as London and other areas in the south-east, where rents have risen sharply in recent years.
May added: “We also, though, want to support businesses and recognise that for some, business rates will go up when these revaluations take place. That is why we have put significant funding in place for transitional relief. Caroline Lucas, the Green MP for Brighton Pavilion, asked May whether she would review the rates upheaval, saying some small businesses in her constituency would face increases of up to 400%.
“But I recognise that there has been particular concern that there will be some small businesses that are particularly adversely affected by the result of this revaluation.” May defended the overall aim of the process, adding: “But I recognise that there has been particular concern that there will be some small businesses that are particularly adversely affected by the result of this revaluation.”
May added: “That’s why I’ve asked the chancellor and communities secretary to make sure there is appropriate relief in those hardest cases.” She said: “That’s why I’ve asked the chancellor and communities secretary to make sure there is appropriate relief in those hardest cases.”
Speaking afterwards, May’s spokesman said she had not been promising any extra money. In talking to Hammond and Javid the prime minister was seeking “to make sure that once we go forward during this process that this transitional fund goes to the areas where it is most in need”, he said. Speaking afterwards, May’s spokesman said she had not been promising any extra money. In talking to Hammond and Javid, the prime minister was seeking “to make sure that once we go forward during this process that this transitional fund goes to the areas where it is most in need,” he said.
He added: “As we have made very clear already, we are mindful of the fact that some companies are going to see their rates go up. That is why we are introducing this £3.6bn transitional fund to ease that transition for those firms that are affected. Asked later about a comment from Lucas that government policy on business rates was in confusion, the spokesman said: “I don’t think it is chaos. We have set out our plans to provide a fund, a transitional relief fund, to make sure that those who are affected by the rise in business rates have a smoother transition to the new system.”
“I think the prime minister is just making sure that assistance is going to the right areas.” When it emerged that Javid had announced the policy as the spokesman was briefing journalists, he said: “I wasn’t aware that he was going to make an announcement. I don’t know what he has said.”
The earlier exchanges between May and Jeremy Corbyn during prime minister’s questions were dominated by the NHS and social care, with the Labour leader repeatedly accusing May of presiding over a crisis.
In response, May said the government was spending more on both, and claimed Corbyn could not properly manage the economy so as to fund the NHS.
In his final question, Corbyn said May’s government had “put the NHS and social care in a state of emergency”.
Raising his voice to a near-shout, he said: “The legacy of her government will be blighting our NHS for decades – fewer hospitals, fewer A&E departments, fewer nurses and fewer people getting the care they need. We need a government that puts the NHS first, and will invest in our NHS.”
May responded that she would “take no lessons on the NHS” from the party that was in power when the scandal at the Mid Staffordshire NHS trust took place.
“They say we should learn lessons,” May said. “I’ll tell you who should learn lessons. It’s the Labour party who still fail to recognise, if you’re going to fund the NHS – and we are putting more money in – you need a strong economy.
“But Labour have a different sort of phrase now for their approach to these things. Remember Labour used to talk about boom and bust? Now it’s no longer boom and bust, it’s borrow and bankrupt.”