Small businesses face a double rates blow, says business lobby group

The Forum of Private Business (FPB) is urging the Government to ease the burden of business rates on small businesses. Many are already being hit by the impact of the recession and spiralling costs, yet face a 5% rise in rates in April 2009. In addition, the Government is planning to allow local authorities to impose additional business rates under its Business Rates Supplements Bill.

The FPB is calling on the Government to scrap the 5% rise in the small business multiplier used to calculate rates payments, which is above the rate of inflation and unrealistic in the current economic climate. In addition, the multiplier should be exempt from increases until at least 2010.

Small firms stand to suffer a double blow under plans to introduce supplementary business rates. The FPB is strongly opposed to the proposed new law. As a minimum, the introduction of this an additional tax, at a time when many small businesses are struggling to survive, must be reconsidered.

Increases to rates charges and the spectre of supplementary business rates mean small businesses face another considerable cost burden at a time they can least afford it, said the FPBís Chief Executive, Phil Orford. This cannot be justified in an environment of falling sales, deflationary pressure and serious recessionary restrictions. It is particularly frustrating considering the rise in business rates has been calculated using old data, namely September 2008ís inflation rate figure of 5%. By February 2009, inflation rates had fallen to 2.1%.

Further, the FPB is calling for Small Business Rates Relief to apply automatically, amid concerns that fewer than half of eligible businesses in the UK actually receive the much-needed support.

On 9 March 2009, a Private Membersí Bill tabled by the Mid Worcestershire MP, Peter Luff, calling for business rates to apply automatically, was withdrawn at the request of the Minister for Communities and Local Government, Sadiq Khan, the MP for Tooting, who argued the Budget should be the occasion for such a move. The FPB was disappointed at the Billís withdrawal, and is urging the Government to allow more struggling firms to benefit by introducing automatic rates relief without delay.

The FPB has submitted proposals that would help small businesses to control costs in its ëBudget for Business Survivalí, which has been submitted to the Government ahead of the Budget announcement on 22 April 2009. The FPB believes the upcoming Budget is an opportunity to introduce real measures in support of small businesses that should not be missed, including reversing the 5% increase in business rates.

Howard Coles is the Financial Director of HCL Fasteners Ltd, a Somerset-based company providing plastic clamping solutions to a range of industries and trades, including joinery. He has recently received a letter from Bath and North East Somerset District Council informing him of the increase.

It is absolutely breathtaking that, when we as a business – along with so many others in the private sector – are laying off personnel, trying to reduce costs and grappling with loss of business due to the recession, our local authority can just carry on as if everything is ok, presumably with the attitude that, if the books donít balance, they can just whack up the rates, said Mr Coles. If only it were so easy in industry, where any mention of a price increase at the moment would see customers disappear over the horizon at the speed of light.

He added: With the recession deepening, sadly many businesses are going to disappear – then where will local authorities get their revenues from? When is the public sector going to wake up to reality? Maybe they should tackle costs by renegotiation their blue chip final salary pension schemes, which are no longer available to the vast majority in industry.