Sajid Javid slams 'scaremongering' over business rates

Communities Secretary Sajid Javid has accused "unscrupulous" companies of trying to scare business owners into thinking their taxes will soar in order to make a profit.

Mr Javid said "scaremongering" rating agents are manufacturing reports about business rates rising while "cynically" promising to help firms win an appeal against any increase "in exchange for a hefty fee".

His intervention comes amid numerous negative reports about the Government's controversial revaluation of business rates, due to come into force in April.

Three London and south east-based Tory MPs, Mark Field, Bob Neill and Crispin Blunt, all called for longer or softer transitional arrangements for firms in the capital.

Mr Javid insisted that, from April 1, thousands of independent shops, small pubs and rural businesses will see their bills slashed while a third of businesses will pay no rates at all.

Ministers are also facing a backlash after official figures suggested the Treasury could take in an extra £1 billion after the revaluation.

The Government has said the predicted extra revenue is the result of growth and new properties coming into the system, and not due to existing business ratepayers being charged more.

And Mr Javid also denied the accusations that the revaluation amounted to a "stealth tax", insisting the Treasury "won't make one penny more" as a result of the changes.

But it comes after business leaders urged ministers to reconsider the pending shake-up amid warnings that it could lead to firms closing and staff being laid off.

The Federation of Small Businesses has complained that the system is "increasingly unfair and outdated, with many facing arbitrary hikes in their bills".

An analysis by Gerald Eve, a firm which advises businesses on rates and property, suggests NHS hospitals and GP surgeries could see a £635 million hike in their business rates over the next five years.

The Institute of Directors has called on Chancellor Philip Hammond to to tackle anomalies that see high street shops pay higher rates on small premises than online giants do for vast warehouses.

Mr Javid admitted the business rates system, which is based on the rental value of a commercial property, is not "perfect".

But he said the Confederation of British Industry, British Chambers of Commerce and Association of Convenience Stores backed it remaining in place two years ago.

He highlighted a £6.7 billion package of rate relief to lift 600,000 firms out of paying rates, and said three quarters of English businesses will see their rates fall or stay the same, with boosts for pubs, the retail sector and rural businesses.

A £3.6 billion package of transitional relief will also help 140,000 firms in London who will see their rates rise due to increases in property values.

And he dismissed as "simply not true" stories about businesses facing a near £2 billion bill because of a rule change giving valuations a "margin of error" which means they only have to be accurate to within 15% to survive an appeal.

In an article for the Daily Telegraph, Mr Javid said: "Although there will inevitably be winners and losers in a cash-neutral revaluation, we're taking action so the vast majority of businesses do not end up worse off, and to mitigate the impact on those who see their bills rising.

"I grew up above the family shop, and I know for myself that running a business is stressful enough without the Government adding to your worries.

"But the only people who should be concerned about April's changes are the scaremongering ratings agents, who are about to see much of their target audience celebrating a fall in their tax bill."

Cities of London & Westminster MP Mr Field told the Telegraph: "Whilst Treasury and DCLG (Department for Communities and Local Government) have, to date, held to their line, the depth of feeling over this, especially in Tory heartlands, means I am confident that some equitable changes will be made and the Budget is only three weeks away so this might be the appropriate time to tweak the scheme."

Retail expert Mary Portas warned that the revaluation will "cripple" high street shops in areas where house prices have increased.

"The tax bill which will hit retailers from April will be the single biggest blow to independent shops since the financial crisis," she wrote in the newspaper.

"I would estimate that at least a third of them will die off."