Ministers misled businesses, says chamber

BUSINESSES across Peterborough have been severely misled by government ministers and are facing a 5 per cent increase in their business rates for the next few months despite Alistair Darling’s assurances to the contrary, according to the Chamber of Commerce.

Last week the chancellor announced that it would bring forward regulations to enable businesses to defer 60 per cent of the 5 per cent planned increase in business rates from April 2009, resulting in a 2 per cent rise over the course of the coming year with the additional 3 per cent being collected over the two years from April 2010.

However with the regulations necessary to do this not expected to come into effect until the end of July, businesses who pay their rates in ten monthly instalments are now facing the full 5 per cent hike until the summer.

And in a double blow, businesses who prefer to settle their bill in one lump sum and have already made payment for the year in full will not be entitled to a refund – missing out on the opportunity to defer part of the increase altogether.

John Bridge OBE, chief executive of Peterborough Chamber of Commerce (below), said: “For the government to mis-lead businesses in this way at a time when cash flow management is at its most crucial is appalling. They made a big song and dance about the rate increase being capped at 2 per cent for the year but what they failed to mention was that it would take them upwards of four months to reduce businesses’ monthly payments.

“It is our understanding from the Treasury that the payments will then even out so that the increase for the 2009-10 year is indeed capped at 2 per cent, but what comfort is that to businesses that are now having to stump up the full 5 per cent? You have to wonder whether the decision was a last-minute attempt to soften the blow of the 2p increase in fuel duty and the ending of transitional rate relief which came into force on 1st April.

“When you consider that no deferrals can be made until the regulations have been put into place, anticipated to be the end of July at the earliest, it doesn’t take a genius to work out that by the time deferrals are actioned businesses will already have paid the full 5 per cent increase for at least the next four months if not longer. This is a massive blow for the cash flow of even the most stable of businesses.

John Bridge OBE“We would also like to know what will happen if a business leaves a premises during the course of the three years over which payments will be deferred – will they be receiving a demand for full payment owed upfront? As we keep saying it will be business that drives the UK out of this recession and the government needs to find a way of supporting firms with these extra costs, because right now their actions are seriously contradicting their words.”