Chancellor Alistair Darling has refused to back down over the 5 per cent increase in business rates that is due to hit next month, but left the door open for future changes to make the system fairer after the 2010 revaluation.

In a letter to Retail Week in response to our Rate Rage campaign, Darling said that there are no plans to amend the policy under which rates will rise next month based on last September’s 5 per cent inflation rate. “Freezing business rates would cost almost£1bn,” he said.

Darling also reiterated his commitment to the 2010 revaluation, which is based on property values two years previously. At that time retailers will face even bigger rises because the value of retail property rose more rapidly than other types of property when the market was good. However, Darling defended the system.

“Revaluation does not, in itself, raise extra revenue,” he said. “It simply redistributes the tax to reflect changes in the property market across the country.”

Retailers are furious at the increase. Debenhams chief executive Rob Templeman said: “No retailer is happy with the 5 per cent increase. It doesn’t reflect where inflation is now and what’s happening in the economy.”

Kingfisher boss Ian Cheshire said: “Helping the retail sector in 2011 will be too little too late for many retailers that find the April rates rise pushes them under.”

However, Darling left a glimmer of light for retailers by saying that in the longer term he would be willing to consider proposals to change the business rates system to make it less vulnerable to fluctuations in the property market.

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