Local government's attempt to prevent ministers from scrapping transitional rate relief appears to have ended in failure, with the Treasury and CLG adamant the popular tax break will be axed this week. Despite heavy lobbying from the LGA, the CBI, and individual councils, the Treasury will impose new tax demands on businesses from April, as the chancellor, Alistair Darling, attempts to finance the UK's huge public debt. This includes a 5% increase in business rates, despite a current RPI inflation rate of zero per cent. A CLG spokeswoman confirmed on 30 March that although ministers were sympathetic towards businesses needs during the recession, there were ‘no plans' for an extension to transitional rate relief, which is made available to firms facing sudden hikes in rate costs. Wandsworth LBC recently claimed that scrapping transitional rate relief would mean some local businesses would see their total rates rise by almost 300% a month – from £260 to £1,006 – and leave them under threat of bankruptcy. A Treasury source said the change had ‘long been made clear to councils, giving them and businesses time to plan for the new regime'. Other forms of support were also available to local businesses. The CBI described the 5% increase in business rates – which was set in September, when inflation rates were higher – as ‘misguided'. Dr Neil Bentley, CBI deputy director-general said: ‘A spike in inflation six months ago should not be allowed to poke business in the eye now, at the worst-possible time.' He urged the Government to ‘freeze business rates for two years, helping companies to survive the recession and save jobs'.
