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Government slammed for ‘hypocrisy’ over helping business

The government will today announce measures to support small and medium-sized businesses while continuing to plough on with damaging tax that ministers spurious claim to be good for business.

Ministers at the Treasury and department for Business and Enterprise will spend just a few hundred million pounds allowing firms to refinance £20bn of debt due for repayment this year. The plan is to help avoid large numbers of companies collapsing as a result of the reluctance of banks to extend credit.

However, the government’s tax on empty commercial premises is a costly and expensive overhead that is seeing many firms penalised for shop or office space they cannot use. Many businesses are laying off staff and downsizing to save on costs, but because they now have to pay full business rates on empty property, they are being hit by the quadruple-whammy of no credit, increased bank charges, a devalued pound and high business rate bills.

Before April 2008 firms received 50 per cent relief from rates on offices and shops and full relief on industrial and warehouse space.

The chancellor made a tiny concession to empty rates rules in the pre-Budget report that saw the very smallest properties given a one year holiday from payments from this April. Government spin claimed this would help 70 per cent of property owners, but the figures included ATMs, public toilets, advertising hoardings and car park spaces which are technically classed as ‘properties’ despite not being so. Government figures show that only 13 per cent of business rate payers were helped by the move which cost just £185 million from the total £900 million take from all liable empty properties.

Around 4 million people eligible for work are currently unemployed¹ while official figures currently stand at 1.8 million.

Liz Peace, chief executive of the BPF, said:

“It smacks of hypocrisy that ministers should be seeking to underwrite firms’ working capital while hitting those very same businesses for business rates on empty properties. Concessions made last November do not tackle the problem that the government has created because of its inability to understand how the commercial property industry works. If you tax something that’s earning no money, you don’t just drive business occupiers into administration, you also limit bigger firms’ abilities to invest in future development which hurts everyone down the food chain.

“It makes perfect sense to persuade banks to keep afloat firms that are fundamentally sound, but it remains to be seen whether banks will simply shrug their shoulders as they have done in the past. It’s also clear that banks are being pulled in two different directions: on one hand they have to rebuild their balance sheets and on the other, they still have to lend. What we need is a coherent and joined up approach to seeing business through the recession rather than spin, empty gestures and damaging, ill-thought out taxes which serve absolutely no long term benefit for the Exchequer.”