Retailers will be able to defer 60% of the business rate increase coming up in 2012-13 equally across the following two years, Chancellor George Osborne revealed today.
The measure willl ease pressure on retailers concerned about the 5.6% increase in business rates due to take effect in April. It is understood all retailers will be able to apply for the deferral, which will be spread across the years 2012-2013 and 2013-2014.
In his Autumn Statement Osborne also announced an extension to the current small business rate relief holiday for a further six months from October 1, 2012 to April 2013.
In addition, the Chancellor tackled fuel duty - another retail concern – revealing the planned January fuel duty rise of 3% will be deferred to August 1, while the second fuel duty rise due in August has been scrapped.
Employment law will be addressed further by the Government, recognising employer’s concerns over taking on new staff.
Up to £20bn will be available to small businesses - those with a turnover of less than £50m - through the National Loan Guarantee Scheme over two years. This aims to reduce interest rates that small businesses can borrow at.
It is expected to lead to a one percentage point reduction in the rate of interest charged to small firms. Osborne used the example of a business facing a 7% interest rate to get a £5m loan, which could reduce its rate to 6%, while interest costs fall by up to £500,000.
A £1bn Business Finance Partnership will also be aimed at mid-sized companies that have been recognised by the CBI director general as a future source for growth.
Addressing the business rates deferral, British Retail Consortium (BRC) director of business and regulation Tom Ironside said: “We welcome the deferral but a similar scheme has been done before, which was not successful because the application process was burdensome and unclear. This deferral needs to made straight-forward and easy.”
BRC director general Stephen Robertson said: “The first thing is we applaud that he is sticking to ‘Plan A’, keeping the UK’s triple-A rating. He has also responded to requests we made of him.
“The ease in fuel duty will be extremely helpful for businesses, while taking pressure off household budgets. But when it comes to employment deregulation, the Government has dragged its feet and it needs more ambition.”
The British Council of Shopping Centres executive director Edward Cooke said the 5.6% business rate increase will push some retailers into insolvency, leading to further job losses.
He added: “Today’s growth figures provide no reassurance that consumer spending will rise to support an embattled retail sector. Government therefore needs to take action on business rates increases on this scale, which create a real disincentive to investment.”
The British Property Federation (BPF) said the business rate holiday for small firms offers 100% tax relief for business on rates up to £6,000, which will mean a third of all shops will not be liable for business rates until April 2013.
BPF chief executive Liz Peacesaid: “While it is very welcome that small businesses and particularly retailers can be helped in this way it is disappointing that this has not been extended to those businesses and landlords who own empty shops, or indeed other business premises.
“Taxing empty property continues to suck investment out of our towns and cities.”
Neil Bennett, director at restructuring specialist Leonard Curtis, said: “Although the Chancellor has undertaken to ease taxes for retailers it looks to be too little too late for many, as we know consumers will tighten their belts further after Christmas and rent rises are inevitable.”
The Office for Budget Responsibility (OBR) said today that it has revised down the UK’s forecast growth to 0.9% this year and growth of 0.7% Next year but it “does not predict a recession here in Britain”.
Osborne said if the euro does not find a way through the current crisis and policy makers do not find a solution that delivers sovereign debt sustainability, they warn that there could be a “much worse outcome” for Britain.
Osborne said: “I believe they are right. We hope this can be averted. But if the rest of Europe heads into recession, it may prove hard to avoid one here in the UK.
“We are now undertaking extensive contingency planning to deal with all potential outcomes of the euro crisis.”
A big boost to housing was also unveiled with the launch of an indemnity scheme that would allow home-buyers to purchase new builds with a 5% deposit, helping 100,000 families and young people buy their own home. Social tenants will also be offered higher discounts within the Right To Buy scheme.
Topps Tiles chief executive Matt Williams said he would welcome anything the Chancellor could do to boost the housing market.
Williams said: “It would be of considerable help if we did see housing transaction tick up.”