Government dismisses “nonsense” claims that ministers underestimated business rates rises

Sajid Javid, communities secretary. Picture: Anna Gowthorpe/PA Wire

Sajid Javid, communities secretary. Picture: Anna Gowthorpe/PA Wire - Credit: PA

The government has dismissed claims that cabinet ministers underestimated business rates rises by 5-7% in a letter to Conservative MPs as 'nonsense'.

In the private email, communities secretary Sajid Javid and Treasury chief secretary David Gauke said there had been 'a relentless campaign of distortions and half-truths' about a business rate revaluation which will leave more than a quarter of companies facing higher bills.

But according to reports, the figures have been underestimated because they do not take into account inflation or 'appeals adjustments', which the Government adds to its calculations to ensure total revenues do not decline as a result of appeals by firms against rating decisions.

Analysis by ratings agent Gerald Eve suggested rates would only fall in 135 council areas, rather than the 259 claimed by the government.

The report shows rateable values would rise in all Norfolk local authority areas, while only two in Suffolk – Ipswich and Suffolk Coastal – would see a decrease.

A Department for Communities and Local Government spokesman said the claim was 'yet more scaremongering'.

'This latest claim from Gerald Eve is nonsense – we have been clear how our figures are calculated and what they include.

'Councils and businesses can see how the revaluation is making bills fairer and is revenue neutral.'

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It came as Chancellor Philip Hammond assured Conservative MPs that he is listening to their concerns about the revaluation.

However, he stopped short of committing himself to action in next month's spring Budget to soften the blow on affected firms.

Treasury sources indicated that the Chancellor was looking at a longer-term solution to level the playing field between the traditional high street shops and pubs hard-hit by the revaluation and the internet giants whose out-of-town warehouses benefit from low rates.

A Treasury source said the Chancellor was 'open to listening to the issues of the hardest-hit, but he didn't make any commitments either way'.

The Government insists that almost three-quarters (73%) of businesses will see their rates reduced or stay the same after revaluation, with some 600,000 firms paying no business rates at all.