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Critics slam Miliband's business rates plan

Published: 2 October 2013
Opposition leader Ed Miliband has said a business rates freeze would provide some relief for small businesses, but others say there is much more that needs to be done.
In his speech at the Labour Party conference at the end of September, Mr Miliband said a Labour government in power would reverse the business rates rise that is due in April 2015, and hold the rates at the 2014 level until April 2017. The party claims this would save small businesses an average of £450 over two years, which critics say is fairly insignificant in the grand scheme of things. Some companies, however, could save up to £2,000, Labour said.

Mr Miliband said that up to 1.5m businesses with properties worth an annual rent of £50,000 or less would benefit, and that the freeze would be funded by scrapping the planned cut in corporation tax in April 2015 for businesses with more than £300,000 in profits. Critics have said, however, that this will benefit small properties, as opposed to small businesses.

With business rates based on 2008 property values, which far exceed many shops' current value, retailers across the UK are paying over the odds.

The coalition government decided to postpone a revaluation of property that was scheduled for this year. As a result, critics point out that Labour's rates freeze may not be of any help. A revaluation would mean that businesses in different areas would pay different amounts in rates.

Head of rating at Colliers International, John Webber, described Mr Miliband's plans as a "sticking plaster rather than a cure." The BRC has also called for a review of business rates and said the system is "no longer fit-for-purpose" and "particularly damaging for the retail industry". Robert Dyas boss and Dragons' Den star, Theo Paphitis, also showed his support, agreeing with the BRC and saying "we have to address the issue sharpish".

MPs were calling for a freeze on business rates at the end of last year ahead of the Chancellor's Autumn Statement, in which he announced rates would increase by 1%, adding more than half a billion pounds to retailers' bills.

Meanwhile, in his review into the future of the high street, ex-chief executive of Wickes, Bill Grimsey, called for a review and revamp of the business rates system, alongside his other recommendations to save the struggling high streets. These included local authorities offering loans to qualifying small businesses, a rate relief for those taking on shop units that have been empty for one year and creating a full time high streets minister.

Business rates income is soon to become the Treasury's fifth biggest source of income and it appears this issue is a welcome topic on the political agenda. Tell us what you think and take our poll.

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