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Business rates hike plan a 'kick in the teeth' for London firms, says Sadiq Khan

Published 29/09/2016

Sadiq Khan hit out at the proposed increase
Sadiq Khan hit out at the proposed increase

London mayor Sadiq Khan has called a proposed hike in business rates "a real kick in the teeth" for the capital's companies.

London is set to bear the brunt of a major review of business rates, which will see bills fall in every other region.

On average business rates across London will rise by an average of 11%.

But some companies are expecting to see their bills potentially double, with detailed valuations due to be published on Friday.

Mr Khan said: "The one thing London businesses don't need post-Brexit is a business rates hike.

"This will serve as a real kick in the teeth for tens of thousands of companies in the capital who are still digesting the recent vote to leave the European Union."

He said the hikes could hamper growth, and called for the bills to be phased in more slowly than is being proposed by the Government.

Mr Khan added: "I will also be lobbying for the additional tax that the Government will force London businesses to pay to be kept in the capital.

"What we need is true devolution of this and many other taxes, with genuine protections for business, so that local government can be properly funded and business does not have to face huge increases year on year."

London's businesses face an increase in bills worth £885 million.

The move will be cost neutral, though, with this extra income offset by cuts to rates elsewhere in the country.

The changes are based on revaluations of premises on 2015 rent levels rather than those in 2008, with London rents having risen far faster than those elsewhere.

The Government will fund transitional arrangements for those companies set to bear the brunt of the change.

London retailers will be worst hit, with their bills set to rise by 14% on average.

Office bills in the capital are set to rise by 10%, and premises used for industry by 4%.

For those businesses that face an increase in their bills, any rise will be capped at 5% in the first year for small properties.

Those businesses facing an increase will have their bills subsidised initially from a transitional fund worth £3.4 billion.

London will benefit more than anywhere else in the country from the transitional relief scheme.

Councillor Claire Kober OBE, chairwoman of the London Councils group of local authorities, said London's 33 councils had already set aside £1.3 billion to fight business rates appeals - which will be made even worse by these changes.

She added: "These new figures further vindicate our argument for a separate, devolved rates system for London which benefits both councils and businesses.

"Decoupling London from the rest of the country would enable us to manage the system more effectively, preventing much-needed funds being trapped in the appeals process and putting an end to businesses paying an ever higher share of England's rates.

"As huge bills hit doormats next year, we know a fresh round of appeals will be inevitable."

Local Government Minister Marcus Jones said: "This Government is cutting business rates. Yet local firms also need to be confident that the rates they pay are accurate and fair, no matter where they are in country, and these updates will give them that reassurance.

"We are committed to helping all businesses flourish and as we make the system fairer up and down the country, nearly three quarters of companies will see no change, or even a fall, in their bills - including 600,000 who from next April will have their bills cut altogether.

"But for the small minority of businesses that do face an increase, we're putting in place £3.4 billion of transitional relief to provide vital support as they adjust to these fair and impartial changes."

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