The Mayor of London Boris Johnson has warned against the Government's damaging plan to hike business rates in London.
Watching the hoards stream over London Bridge each morning makes one think that everyone in London is employed by large city corporations. As it happens, 40% of Londoners are employed by small businesses. The vast majority of economic activity in our city is undertaken by small businesses. Therefore, any policy that has a negative impact on small businesses strikes at the very heart of our city's economy. So imagine my disbelief when I hear that the Labour Government is planning a 10% hike in business rates for London before inflation, over the next five years. Most other regions in the U.K. can look forward to reductions.
London already pays over £400m a year more to the Government in business rates than it gets back in grants to fund local services. If these proposals are implemented it would add £565 million to the costs of the capital's businesses by 2015, resulting in London subsidising services in the regions to the tune of nearly £1 billion a year. London, it seems, is being punished for its success. In their infinite wisdom, the Government decided to revalue rates based on property valuations in April 2008. That's a bit like pricing bubble gum based on it's mass – at the point just before it bursts all over your face.
Now that property values in London have gone south, many small businesses will be hit with extremely unfair rate hikes. This action directly contradicts all the mighty rhetoric spewing from Gordon Brown about helping the country through the recession. I am calling on the Government to think again about this rate hike before they make their final decision in the autumn, because it is just madness to hit our small businesses when they are the key to getting London out of the recession.