Industry calls for more government aid

Industry bodies say that the government “should do more to help struggling businesses”, despite its announcement of plans to allow firms to pay off a 5% increase in business rates over three years instead of one.

Last week’s announcement made by Alistair Darling, the chancellor of the exchequer, will mean that food and drink manufacturers will have the chance to pay a lower 2% increase in 2009/10 and make up the remaining 3% in the following two years.
But the Confederation of British Industry (CBI) said that the move “would not reduce the tax burden on companies” - it will simply allow them to pay the 5% increase over three years instead of one.
“We have been campaigning for a two-year freeze on business rates, instead of the 5% rise that is still being applied over time,” said Richard Lambert, CBI director-general.
However, he added that it was a “step in the right direction” and was a move that would help companies at a critical time by improving cash flow. “We are also pleased that the change will defer increases due to transitional rate relief, which had threatened some companies at a difficult time.”
The Forum of Private Business estimated that a business paying a rates bill on a fairly typical property seeing a £600 rise in its 2009/10 rates liability would be able to defer £360 of that increase to future years. It said that the original 5% increase planned for April 1 2009 would have been an extra “burden on small businesses”, many of which are “already being hit by the impact of the recession and spiralling costs”.
The Food and Drink Federation (FDF) also welcomed the move. A spokeswoman said: “The FDF welcomes any relaxation in the regulatory burden in the current economic climate.”