Theresa May fails to pledge extra money for local businesses hit by rates rise

Downing Street has quashed suggestions that businesses hit by a rise in business rate could get extra cash – despite reassuring words by the Prime Minister in Parliament this afternoon.

At PMQs on Wednesday afternoon Theresa May said she had “asked the Chancellor and the communities secretary to make sure there is appropriate relief in these hardest cases” – after firms said they would be hit by steep rises in payments.

There was however confusion following the announcement after Ms May’s spokesman later indicated to journalists that the Prime Minister was not signalling additional cash for business rates relief.

Instead, he suggested the Government’s policy was about ensuring the transitional fund already pledged would go to the places it was most needed.

Matters were further confused after Communities Secretary Sajid Javid told the House of Commons this afternoon that additional support measures would in fact be announced in the Budget. He said the nature of such measures had not yet been decided.

Speaking again later in the afternoon, the same Prime Minister’s spokesperson denied that the Government's approach was chaotic.

“I don't think it is chaos,” he said. “We have set out our plans to provide a transitional relief fund to make sure that those who are affected by the rise in business rates have a smoother transition to the new system."

Firms in some areas say a regular revaluation of their properties to see how much property tax they should pay will see them facing sharp increases.

The Government postponed the revaluation, which was originally scheduled for 2015, ahead of the general election, meaning rent levels have risen further in a single jump than they otherwise would have.

At PMQs the Prime Minister was asked by Green MP Caroline Lucas about the hikes. She said hotels and pubs in her Brighton constituency were facing sharp increases of up to 400 per cent due to sharp increases in property values and that the whole property tax system need to be reviewed.

Ms May replied: “Business rates of course are based on the rental values of properties. The rental values of properties do change over time – they go up and down. It’s right that rates change to recognise that. That’s the principle of fairness that underpins the business rates system.

“We also, though, want to support businesses, and recognise that for some business rates will go up when these re-evaluations take place – that’s why we’ve put significant funding in place for transitional relief.

“But I recognise that there has been particular concern that there’ll be some small businesses that will be particularly adversely affected by the result of this revaluation. That’s why I’ve asked the Chancellor and the communities secretary to make sure there is appropriate relief in these hardest cases.”

Her statement comes ahead of Communities Secretary Sajid Javid making a statement on local government funding in the House of Commons later, and just weeks ahead of Chancellor Philip Hammond’s planned budget.

After the exchange Jeremy Corbyn’s spokesperson said there was “clearly” a need for more money for transitional support, and accused the Government of favouring larger firms over small businesses. He failed however to set out a figure or say how the extra support would be paid for.

Mr Javid said in Parliament this afternoon: "I have always listened to businesses and this situation is no exception.

"It's clear to me that more needs to be done to level the playing field and to make the system fairer.

"I am working closely with the Chancellor to determine how best to provide further support to businesses facing the steepest increases.

"We expect to be in a position to make an announcement at the time of the Budget in just two weeks' time."

Business rates tend to hit businesses with high street frontage because they are based on rents, which constitute a higher proportion of costs in retail areas.