Last month, Sadiq Khan warned that some businesses in London could be forced to close down if the Government ploughs ahead with plans to increase the business rates bill by as much as 45 per cent this year for many of the capital’s ratepayers. Bills will start dropping on doorsteps in the coming days.
London’s businesses are facing a £900 million business rate hike as a result of the revaluation which will fund an equivalent tax cut for the rest of the country. That figure could eventually rise to £1.1bn.
Yesterday, it was reported that the Chancellor is expected to help some small companies in London by offering special help to smaller firms facing ‘cliff edge’ hikes in their rates and committing to holding business rates revaluations more regularly.
While the Mayor welcomes this small U-turn, he warned it will not undo the long-term damage such a steep hike will do to the prospects of many businesses across London. Even if some of the worst hit firms and sectors receive additional help to meet this year’s bills, they will still be left with an unmanageable long-term burden. Meanwhile, thousands of businesses who do not qualify for the additional help on offer will still face sharp rises at a time when they are struggling with the uncertainty of Brexit.
The Mayor of London, Sadiq Khan, said: “I am pleased that the Chancellor is finally starting to wake up to the serious impact this will have on London’s business community. However these measures are nothing more than an inadequate sticking-plaster on a crisis that could force thousands of London businesses to close for good and change the face of our high streets forever.
“Rather than tinkering around the edges of an unfair settlement, the Chancellor needs to acknowledge that the current system is unfair to businesses and risks holding back growth in London.
“He should agree to our demand of full devolution of business rates to London, combined with genuine protection for business, so that we, like the devolved administrations of Scotland, Wales and Northern Ireland, can act in the interests of Londoners and their businesses.
“Meanwhile, we need far stronger transitional arrangements to help out all London businesses who are facing unmanageable rises this year.”
Last month, the Mayor, together with The New West End Company, London Councils, the London Chamber of Commerce and Industry, the Federation of Small Businesses in London, the Heart of London Business Alliance and many other leading organisations, wrote to the Chancellor of the Exchequer Philip Hammond, arguing that the scale and suddenness of the business rates hikes will have a negative impact on pubs, retailers, restaurants, shops, theatres and clubs.
They said this would damage London’s high streets as well as the city’s appeal as a destination for international visitors and investors.
The organisations urged the Chancellor to introduce measures to mitigate the impact of the rises by introducing policies to help businesses generate more income and to commit to a review of business taxes, including business rates.
This would include raising the current national £12,000 rateable value threshold, below which small businesses receive 100 per cent business rates relief, to a more realistic level in London to mitigate the impact of the revaluation on small and medium-sized businesses.