Businesses feel brunt of business rate rise

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, commenting on the latest inflation statistics, said: “The publication of the latest inflation statistics shows that, as we have previously said, the Bank of England was overly optimistic in how quickly inflation would fall. The Consumer Prices Index fell to 2.2% in September, the lowest since November 2009, and this will be welcomed by many consumers who have faced falling real incomes over the past few years. This should help to alleviate pressure on household spending though wage rises remain below this level. The driver behind this fall is last year’s sharp utility bill rises falling out of the measure, but consumers will continue to feel the pressure as last week’s announcements from the energy companies show large rises are ahead.

“The Retail Prices Index (RPI) inflation figure published today will be used to set business rates across the country for next year. The Chamber has calculated that, with RPI this month at 2.6%, businesses in Greater Manchester will be asked to pay an additional £26.7 million in business rates next year, a sum of money equivalent to employing an additional 1,162 people.

“Whilst 2.6% is lower than the 5.6% increase in business rates last year, many businesses, especially smaller, high street retailers, find business rates particularly onerous as, unlike corporation tax, it is not based on the ability to pay. With the Chancellor of the Exchequer currently preparing his Autumn Statement, the Chamber urges him to consider the endlessly rising cost of business rates, particularly when the Government feels able to freeze Council Tax for households. Our members repeatedly tell us that business rates are a drag on growth and actively hamper them in their ability to do business and employ more people.”