Business rate u-turn gives hospitality industry welcome break

The hospitality industry has welcomed the news that plans to increase business rates by 5 per cent from today have been scrapped, but has criticised the Government`s late announcement and its refusal to abandon the rise altogether. 

Last night Chancellor Alistair Darling announced he was making a u-turn on plans to introduce a 5 per cent rate increase from today, instead telling businesses that rates would rise by 2 per cent from today and by a further three per cent over the next two years.

The move means that business rate-payers will be able to defer around £600m across 1.6 million properties, boosting their cash flow for the current year.

Darling said: “The Government recognises that businesses need help now to ease their cash flow at a time when money is very tight. This measure will help businesses to smooth their rates payments over the next three years.”

However, a spokesman for the British Hospitality Association said although the move would give businesses a break this year, deferring the rise simply meant they would have to find the money at some point. 

"The concession will help the cash flow problem but it only defers the additional payment to future years. What we were wanting was the increase to be abandoned altogether in a time of such recession, which the government has refused," he said. 

Jeremy Hill, director at hospitality property agents Christie & Co said although the news was welcomed it should have come earlier.

He said: “We welcome this last-minute move by the government to back down on what could have been a crippling increase in business rates for small businesses during what is already a very challenging climate. However, due to the last-minute nature of this decision, many small businesses will be left with more red tape in order to agree revised payment plans with their local councils.”