The FSB has voiced concerns that a third of SMEs will see profits drop as a result of the business rates recalculation as the shadow business secretary goes on the offensive
Since the government announced that business rates were to be reviewed for the first time since 2010, the backlash has been growing as the business community comes to terms with who will be coughing up more or paying less. Rebecca Long-Bailey, the shadow business secretary, has spoken out to criticise the recalculation while the Federation of Small Businesses (FSB), the organisation supporting SMEs, has released a new survey revealing that 36% of its members expect to see their rates rise.
Of that third of business owners, 44% estimate that their annual expenses will rise by more than £1,000 and 21% expect their annual bill to increase by over 40%. Given this, it’s hardly surprising that 54% of the affected business owners expect to see a fall in profits and 55% plan to reduce, postpone or cancel investment in their business.
Commenting on the survey and the rates row, Mike Cherry, national chairman of the FSB, called the system “an unfair, regressive tax which hits small firms before they’ve had the chance to make their first £1 in turnover, let alone profit” and urged “the chancellor to raise relief thresholds” in a bid to protect “hundreds of small businesses currently left out in the cold.” He continued: “A small hardship fund designed to assist pockets of firms throughout the country would go a long way to resolving the anxiety felt within the small business community.”
And the FSB isn’t alone in being worried about the recalculation of business rates: Labour has pointed out that while small businesses may see their profits plummet as a consequence, several big corporates will see their costs slashed. “It cannot be right for smaller, town centre retailers to be facing massive hikes while the Amazons and ASOS’s of this world have their business rates cut,” said Rebecca Long-Bailey, shadow business secretary. “From delaying the revaluation to their failure to put adequate transitional arrangements in place, the government have mishandled this whole process, and should provide immediate emergency relief to stop thousands of businesses going under. But the reality is that business rates are a ticking time bomb.”
As for the government's response to these concerns, it seems we'll have to wait a bit longer to find out the specifics about any support businesses could get. Speaking in the House of Commons last week, communities secretary Sajid Javid responded to some of the concerns by stating that the government will ensure that businesses most severely hit by the rates review will receive appropriate relief and that he expected to “be in a position to make an announcement at the time of the Budget".
As chancellor Philip Hammond’s budget announcement on March 8 inches closer, it’s safe to say that Blighty’s small firms will be listening attentively.