Business groups call for rates reform

Two of the country's leading business organisations have called on the Chancellor George Osborne to take urgent action on business rates in his Autumn Statement on 5 December.

In their respective submissions to the Chancellor ahead of the Autumn Statement, the British Chambers of Commerce (BCC) and the Confederation of British Industry (CBI) called for an overhaul of the current system.

Under current rules, the Government calculates how much more businesses will pay in rates next year by using the retail prices index (RPI) measure of inflation for September.

September 2013's RPI figure was 3.2 per cent. The BCC says this will add a further £900 million to the business rates bill next year. By October, the RPI inflation was down to 2.6 per cent, which the BCC said highlighted the "absurdity of using just one month's figure to determine the additional tax that businesses pay."

The BCC's director general, John Longworth, said: "There is no question that the business rates system is broken. This is a tax that hits companies of all sizes long before they a make profit, and acts as a drag on business growth and investment."

"The Chancellor should use the Autumn Statement to announce a two-year freeze on business rates, along with a root and branch reform of the entire system."

The CBI's submission to the Chancellor said that "full reform" of the business rates system was needed, calling it 'uncompetitive', 'distortive' and 'complex'. The CBI wants to see rises in rates capped at two per cent rather than using the 3.2 per cent RPI figure.

The CBI's director general, John Cridland, said: "At the heart of our realistic package of measures for the Chancellor is an overhaul of the business rates system, which will boost the high street, manufacturers and factories. We want to ensure windows are opened up, not boarded up."