Today we’re issuing an urgent call for Conservative-run local authorities to join our campaign to stop the Government’s planned business rate hike in April.
We’ve surveyed the likely effect of the Government’s planned tax increase on local businesses in Wandsworth and the results of this exercise are frightening. From our sample, we calculate that thousands of London’s small businesses will be hit with sharp rises in their rates. And that some will face 100 per cent rises.
It’s of course small firms that will be hit the hardest and some will not be able to cope with a sudden increase in costs.
Let’s also not forget that this is on the back of a significant rise last year.
Businesses are still struggling with the effects of Labour’s recession. Now is not the time to hit them with yet another tax increase.
We are asking our colleagues in councils across London to run local impact assessments – as a matter of urgency – so that we can understand the full scale of the problem before the revaluation begins.
We all know Labour’s rhetoric of supporting businesses is not matched by the reality of their policies. It’s time for Conservative local authorities to join together to fight this unwanted and unfair tax rise.
Much has been written about business rates over the last year. It’s worth looking back and understanding the context in which April’s planned rises will take place.
The Government removed the principle of annual ceilings on increases when it undertook the business rate revaluation last year. Until then small businesses could expect rises at no more than between five and 15 per cent. The result of the Government’s decision was that in 2009, the first year since 1990 without this limit, many firms faced crippling increases way in excess of rises in previous years. Incredibly, some experienced a 300 per cent rise. At a time of recession this was an extremely bitter pill for businesses to swallow.
Wandsworth is the small business borough. We are home to over 7,000 small businesses. We understand the value of such businesses, not only to the local economy, but also to the quality of life for our residents.
So, in response to the Government’s huge tax rises, we set up the Wandsworth Hardship Relief scheme for small businesses – the only such scheme in London – to help prevent the worst effects of this policy. More than 50 local firms are now receiving support, with some traders seeing their bill cut by up to 40 per cent. Without our support these businesses would have struggled to survive, and in some cases would not have been able to do so.
We cannot afford to let our small businesses go to the wall. There is only so much we can do under the current system, however as rates are set at the national level. We have argued before on this website and to Government, that local authorities should have this power, that we should set rates appropriate to our area. Rate levels set at the national level are arbitrary and are often out of kilter with local realities.
Ultimately we want to see an incoming government devolve this power to the town hall – although councils would have to earn this right by demonstrating their commitment to affordable tax levels. Any such move would of course come too late for those who will be hit in April this year. We need to act now to stop the Government’s plans.
To provide the evidence to support our campaign we surveyed local businesses on the impact of the planned rate revaluation. Our local study revealed that one third of Wandsworth’s businesses could see their bill increase by more than ten per cent if the Government’s plans are brought into force.
Yet for some it will be far worse. For example one business on Granville Road (Wandsworth Town) faces 107 per cent rise, a Bedford Hill (Balham) business faces a 98 per cent rise, and a Garratt Lane (Earlsfield) firm will be hit with a 78 per cent jump.
Not only is this tax rise unwanted – particularly at a time of recession – it is also unfair, unjustified, and calculated on a false basis. Incredibly, the Government is using rental values from April 2008, the peak of the commercial property boom, as the basis for this year’s revaluation. Yet, we all know that rents have since dropped in the recession. With the Government’s plans business will be forced to pay rates based on peak market values.
The hardship will be particularly acute for many small firms for whom their increase in ratable value will be so severe that they are lifted above the rateble value of £6,000 Small Business Rates Relief (SBRR) threshold. This means they will lose their entitlement to a 50 per cent discount on their bill. A bitter, double whammy indeed.
At Wandsworth we pride ourselves on having the lowest council tax in the country. We understand that individuals and businesses thrive in low tax environments.
We hope you’ll join our campaign to stop this regressive tax from crippling the very people we need to get this country back onto the road to economic recovery. Let’s reveal the full extent of the danger posed by this Government’s anti-business policy, and let’s get to work in opposing it.