Pressure mounts on Osborne for two-year business rates freeze

The Chancellor is coming under mounting pressure to throw a lifeline to shops and businesses across Britain by announcing a freeze in business rates.

The tax, which brings in £25bn a year for the Treasury, is overtaking rents as the biggest cost faced by shops, according to senior figures in the retail industry.

Some store chains have warned advisers in the Department for Business that they would be prepared to start printing on customer till receipts the cost of meeting business rates – to highlight the burden on their companies.

Business rates, collected by local councils every year, and based on a property’s rateable value, are due to increase 3.2pc next April, having increased nearly 23pc in five years.

One in seven business premises in England is thought to have been summonsed by local councils over unpaid business rates last year.

The Daily Telegraph is today calling on the Chancellor, George Osborne, to announce in next month’s Autumn Statement a two-year freeze to business rates, bringing an end to more than two decades of inflation-linked increases, and allowing time to decide how to reform the tax.

“The business rates system is uncompetitive, perverse and in dire need of reform,” John Longworth, director-general of the British Chambers of Commerce, writes in an article today.

“A complete root and branch review, while rates are frozen for this year and next, is the only way to create a system that works for business, government and the economy as a whole”.

Terry Duddy, chief executive of Home Retail Group, which owns Argos, said: “The taxation regime for retailers is outdated and outmoded. Business rates are due to put an extra £242m onto retailers’ costs, from April. It’s unsustainable.”

The Centre for Retail Research claims that between 6,000 and 8,000 shops may go to the wall next year. “A freeze for two years could bring almost 2,000 stores back from the brink and save up to 10,000 jobs.” said its director, Joshua Bamfield.

Retail veteran Bill Grimsey, who recently published a review of the high street, said: “Business rates have been a terrible blind spot in high street policy for years. Everyone knows this tax has lost all credibility as it no longer bears any relation to property values. It’s now become an anti-business tax.”

Labour will today turn up the political heat on the Chancellor by repeating its pledge to freeze business rates for smaller shops in 2015 if Labour wins the next Election, followed by a cut the year after.

Chuka Umunna, the shadow business secretary, will tell a Heart of the Community conference organised by the Association of Convenience Stores: “There is nothing to stop George Osborne matching our commitment to cut, then freeze business rates in 2015 and 2016 when he delivers his Autumn Statement in two weeks. If he does, we will support him.”

In Scotland, First Minister Alex Salmond is understood to be considering a cut in business rates and an announcement could come as early as today.