The Chancellor’s new business rate support scheme has been welcomed by UK businesses, but hotel groups have stressed it does not go far enough to fix the ‘outdated’ system.
Jeremy Hunt has unveiled new measures to help businesses and shops which he says will be worth a total of £13.6billion.
The measures include freezing the corporate rate multiplier for another year to protect businesses from rising inflation, meaning rates will no longer be raised to double-digit price inflation at consumption (CPI) from next April.
This measure alone is expected to save businesses £9.3 billion over the next five years.
The Treasury has also pledged to increase rate relief for retail, hospitality and leisure businesses from 50% to 75% for 2023 to 2024.
While the relief is capped at £110,000 per business, the government has said around 230,000 commercial properties are set to benefit from a £2.1billion tax cut next year.
In addition, many street traders who have seen the value of their property rents fall in recent years will benefit from an increase in business rates.
The government has said it will remove the cap on the downside, meaning businesses that see their corporate rate bills fall following a reassessment will immediately benefit from the cut.
Robert Hayton, UK chairman of property adviser Altus Group, hailed the autumn statement as a “budget for the struggling high street” that listened and acted on the concerns expressed by retailers.
He said: ‘This is a budget for the beleaguered high street where rents have been falling for several years.
“Next April will now level regions and sectors that have fared poorly while protecting them against unusually large increases in tax debt.
“The next part of the puzzle could come early next week with the release of new draft assessed values, and then businesses will know exactly their rate bills for next year.”
Total business rates paid by the retail sector are expected to fall by a fifth, the government has said.
The British Retail Consortium (BRC) – which works with more than 5,000 member businesses – has also welcomed the new measures, which will prevent many retailers from overpaying their bills.
BRC chief executive Helen Dickinson said: “Today’s announcements show that the government has heard the concerns of the retail sector.
“This fall statement supports retailers by reducing near-term upward pressure on prices and helping retailers protect jobs, keep stores open and protect vibrant local communities.”
While industry groups have welcomed the support package, some have urged the government to consider a deeper structural change to the business pricing system as many businesses face crippling costs over the winter.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘It is right that the Chancellor has recognized the need to change our business pricing system and we welcome the extended and increased relief to 75% for pubs, so they don’t continue to be penalized by unfair taxation.
“Urgent root and branch reform is still needed to make business pricing fit for the 21st century. (With) the decision not to introduce an online sales tax, it seems that the government does not recognize the completely archaic nature of the current system.
She added that pubs and brewers are facing a ‘cost hurricane’ and that failure to provide additional support for the sector will have a massive effect on their survival.
Trade body UKHospitality echoed Ms McClarkin’s concerns, pointing out the Chancellor failed to address the fact that much of the sector may not survive the winter.
Its chief executive, Kate Nicholls, said: “I am delighted the Chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a multiplier freeze, extended reliefs and no transition down.
“However, the current system is still outdated and inadequate.
“The government has made a clear commitment to a thorough review and it is essential that this is delivered as soon as possible.”