Business rates have increased dramatically even though the previous government pledged to help companies through the recession.
Some of the High Street devastation we can now see is mainly due to business rates rising by 11% in the three years to end of March 2010, according to Financial Mail.
The Department for Communities and Local Government says that the rates businesses pay are linked to the RPI, but this has only risen by 7.44% over the three year period. In 2007/8, the Treasury collected £17.4bn, in 2008/9 the figure was £19bn and in 2009/10, £19.4bn was collected in business rates. The average rates bill in 2009/10 was £11,432, a rise of £1,102 from 2007/8.
Phil McCabe from the FPB said that struggling firms have been hit extremely hard by this significant increase.
The situation is not likely to improve next year either unless the coalition takes some action quickly.
The annual increase in commercial property rates is based on the RPI for September. The RPI figure for September was 4.6% which will produce a much higher increase than most businesses had budgeted for. Retailers in particular are expected to be badly hit by such a rise, especially at a time when public sector spending cuts have dented consumer confidence.
The director general of the British Retail Consortium, Stephen Robertson, has already sent a letter to the government urging them to change the way they calculate next year’s increase. He pointed out that nobody expected inflation to fall as slowly as it has been doing. Retailers faced with massive rates increases will have to trim costs elsewhere and this will prevent them from creating new employment to soak up some of the public sector fall out.
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Image: Shopping – Grim Sweaper by David Blackwell.
