Caroline Lucas MP, backed by the Federation of Small Businesses, is today urging Chancellor George Osborne to give a boost to thousands of Brighton and Hove’s small businesses by announcing an extension of relief on business rates in his autumn statement next week.

The MP has tabled an Early Day Motion in parliament with cross party support to put pressure on the Chancellor to increase help for small and independent businesses, including extending the period of business rate relief for 3,300 businesses and measures to allow 500 more of the city’s businesses to benefit.

The motion highlights the regressive nature of business rates, which places a disproportionate burden on small businesses and distorts economic behaviour – using a flawed measure to determine the level of inflationary rises.

At the moment, businesses whose properties have a rateable value of £6,000 or less qualify for 100% relief on business rates, with a tapered relief then applying to properties with a rateable value of less than £12,000. Altogether, this currently accounts for 3,300 of the city’s small businesses.

Caroline said:

"Brighton and Hove‘s independent shops and businesses are the beating heart of the local economy and a huge part of what makes the city so unique.

"But in this tough economic climate, many are telling me that it’s becoming increasingly difficult to keep their heads above water – with high business rates being one of the biggest burdens for smaller businesses who cannot simply absorb costs like larger companies can.

"In light of the government’s damning failure to get the economy back on its feet, the Chancellor should now extend the relief on business rates – currently received by 3,300 small businesses in the city – beyond the existing deadline of 31 March 2013.

"I also want to see the threshold for tapered relief increased from £12,000 to £15,000, so that all businesses with properties that have a rateable value of less than £15,000 qualify for a discount.

"In Brighton and Hove, this would make a real difference to an extra 500 of our city’s hard working small businesses, yet would cost only an estimated £1.2million – a drop in the ocean for the Treasury.”

Lord Brett McLean, East Sussex Regional Chairman from the Federation of Small Businesses, said:

"We warmly welcome this initiative from Caroline Lucas to boost small businesses by tackling high business rates, which are the third biggest expense for many small firms after rent and wages – with big inflationary rises over the last couple of years.

"Many of our smallest businesses have benefitted from Small Business Rates Relief and we want to see this extended beyond March next year.

"With economic recovery remaining fragile, this would give certainty to small firms that they wouldn’t be hit with increased costs from April.

"Furthermore, we would like to see an annual average, rather than September’s RPI figure, used to uprate business rates to make increases more predictable and even out some of the variations we have seen recently.”

ENDS

Notes to editors

1)      All figures from BHCC Benefits and Revenue department

Caroline’s EDM in full:

BUSINESS RATES AND EXTENSION OF RELIEF FOR SMALL BUSINESSES

That this House notes business rates are the third biggest expense for many small businesses after rent and wages;  further notes business rates are a regressive tax not related to the ability to pay which places a disproportionate burden on small businesses; also notes the IFS Mirrlees Review states “The business rate is not a good tax” which distorts economic behaviour; further notes using a monthly average RPI to determine the inflationary rise can lead to disproportionate rises in business rates, such as the 5.6% increase in 2011, whereas using an annual average RPI would tend to flatten out spikes and make increases more predictable; therefore supports the Federation of Small Businesses’ call for the Government to review the process by which the inflationary uplift is decided; calls on the Chancellor of the Exchequer to extend beyond 31 March 2013 100% relief on business rates for properties with a rateable value of £6,000 or less, to also extend beyond 31 March 2013 tapered relief for properties with a rateable value of less than £12,000, and to increase the threshold from £12,000 to £15,000[1]; calls for these extensions and increases in relief to be funded by the Treasury and not translated into further cuts to already hard-pressed local authorities; and to urgently consider and bring before the House further measures to assist small businesses.