Tory pledge on business rates

Hundreds of small shops and firms across Rochdale would get a tax cut under Tory plans to overhaul business rates, it has been claimed.

The Conservatives would automatically give a 50% discount to small business compared with the larger businesses which would pay the full levy.

Currently, most small firms are entitled to one of several reliefs if their rateable value is less than £15,000.

In a recent survey, Rochdale Council revealed that just 28% of small businesses claimed rate relief, while research by the Local Government Association revealed that across the country less than half of eligible businesses claim the relief.

Tory shadow spokesman for communities and local government Caroline Spelman said: “Small shops and businesses are facing tough times in Labour’s recession. These firms, from corner shops to local pubs, are the lifeblood of local communities.

“A responsible government would do more to help them. Yet Gordon Brown is making it as difficult for small firms to claim the tax relief to which they are entitled.”

Senior Conservative MP Peter Luff, chairman of the Commons business select committee, drafted a Private Members’ Bill, which would slash the red tape for businesses eligible for rate relief.

Ministers have refused so far to back it but the Tories have agreed to implement the legislation if they win power at the next election.

Small business rate relief was introduced in 2005, allowing small firms to claim up to a 50% discount on their business rate bills.

However, critics claim firms have to fill out reams of paperwork to claim the rate relief. In Wales, rate relief is applied automatically.

Speaking about Mr Luff”s Bill, local government minister Sadiq Khan told Parliament: “The Bill is full of good intent. We’re not ruling this out as an option for the future.

“The Federation of Small Businesses (which helped formulate the bill) has truly served its members’ objectives well in the area of rate relief.”

However, he also said the Government was not comfortable with increasing the administrative burden on councils, adding that automatic rate relief could lead to a substantial increase in costs.

The Valuation Office Agency has warned that business rates are set to rise by 5 per cent in April, despite falling inflation.