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Sajid Javid: Small firms facing business rate rises will be given extra help


Communities Secretary Sajid Javid has been accused of misleading colleagues over a business rate revaluation

Communities Secretary Sajid Javid has been accused of misleading colleagues over a business rate revaluation

Communities Secretary Sajid Javid has been accused of misleading colleagues over a business rate revaluation

Extra help for small companies facing business rate rises will be announced in the Budget on March 8, Communities Secretary Sajid Javid has announced.

His announcement came shortly after Prime Minister Theresa May told MPs that she had ordered Mr Javid and Chancellor Philip Hammond to make sure there was "appropriate relief" for the firms hardest hit by the revaluation coming into effect in April.

There was no immediate indication of what form the additional support will take.

The Government has already established a £3.6 billion transitional fund to help businesses facing sharp increases when the property-based levy is updated for the first time since 2010.

Labour has said that more money is needed, accusing the Government of consistently favouring large businesses over smaller companies in its tax reforms.

Business organisations have complained that the latest revaluation imposes stiff increases on some traditional high-street shops and pubs, while out-of-town warehouses run by internet giants escape more lightly.

Ministers insist that almost three-quarters of firms will see rates decrease or stay the same, while 600,000 of the smallest businesses will be taken out of the tax altogether.

Flanked by Mr Hammond in the House of Commons, Mr Javid told MPs: "It is clear to me that more needs to be done to level the playing field to make the system fairer.

"I am working closely with the Chancellor to determine how best to provide further support to businesses facing the steepest increases.

"We expect to be in a position to make an announcement at the time of the Budget."

A Downing Street spokesman later denied that the Government's approach had been chaotic, telling reporters: "I don't think it is chaos.

"We have set out our plans to provide 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."

Mr Javid's move - two days before bills for the coming year are due to start being sent out - was welcomed by rent and rates specialists CVS, whose chief executive Mark Rigby said: "E ven at the eleventh hour, short term, I am confident that with some form of targeted relief, the financial burden can be eased for those most affected, particularly small firms.

"Longer term, given the issues highlighted by my firm with the tax reductions on the Amazon distribution centres and the dismay and perturbation that has ensued, meaningful discussions must be had around the tax system to ensure that it is fit for purpose for the 21st century economy."

The concession on business rates came after the Chancellor assured Tory MPs at a private meeting earlier this week that he was "alive" to the concerns of small businesses, some of which are facing rates hikes of more than 100%.

As a string of angry MPs confronted him with cases of struggling firms in their constituencies, the Chancellor told them he was in "listening mode" on the issue.

London Mayor Sadiq Khan has said the revaluation will mean an overall £900 million rate hike in the capital, which could force businesses to close.

And the chair of the influential Commons Treasury Committee, Andrew Tyrie, has written to the Chancellor urging him to consider whether there is "scope for more transitional relief" for the worst-hit businesses.

Announcing plans for his committee to investigate the rates row, Mr Tyrie said: "It would be concerning if, as a result of the revaluation, large out-of-town premises are benefiting at the expense of small high-street firms.

"I will be writing to the Chancellor for the facts. Parliament needs to know the extent of this problem."

Mrs May told the Commons that it was "right" for rates to change to reflect movements in rental values of properties.

But she added: " 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.

"That's why I've asked the Chancellor and the Communities Secretary to make sure there is appropriate relief in those hardest cases."

A Downing Street spokesman later indicated that the Prime Minister's words should not be taken to imply that she had announced extra money for the transitional fund.

Treasury sources have indicated that Mr Hammond is looking at a longer-term solution to level the playing field between traditional retailers and the giants of the new digital economy.

No 10 rejected any suggestion that Mrs May and Mr Javid were at odds over the issue.

"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," a spokesman said.

"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."

Liberal Democrat leader Tim Farron said it had become another Government "omnishambles".

"If ministers cannot announce what will be in the budget, why did Sajid Javid say that the Government would U-turn on business rates in the budget?" he said.

"This Government couldn't organise a night out in a brewery, let alone Brexit."