Business leaders have welcomed a Government decision to defer its planned business rates hike of 5 per cent, which has been instead limited to just 2 per cent.
Chancellor Alistair Darling said the remaining 3 per cent rise would instead be “smoothed out” over the following two years.
The 5 per cent rise was meant to come into effect from today.
CBI director-general Richard Lambert said:“Although this change will not reduce the tax burden on companies, it will allow them to pay the 5 per cent increase over three years instead of one.
“This is a step in the right direction, helping companies at a critical time by improving cash flow.”
Engineering Employers Federation head of economic policy Lee Hopley said the move would provide some “much needed relief”.
British Council of Shopping Centres chief executive Michael Green said: “We are pleased that - following discussions with BCSC and other industry bodies – the Government has taken some action to assist occupiers.
“We await with interest further information about the implementation of the changes, in particular how quickly rate payments can be reduced to reflect an increase of only 2 per cent this year and how the remaining 3 per cent increase will be phased in over the next two years.”
But the British Chambers of Commerce head of policy Kevin Hoctor said the decision would not be any real help to firms.
He said: “We asked the Government to freeze the business rate increase because RPI inflation is at zero per cent.
“Staggering the cost is still an increase and it will be complex. Businesses will still be hit at a time when they have restricted cash-flow and growth.
“This doesn’t make any sense in an economic downturn. It will be business that drives the UK out of this recession so I would urge government to find a way of supporting firms with these extra costs.”