Hammond under pressure from Tory MPs over business rates

UK Chancellor Philip Hammond was under pressure over changes to business rates which have caused anger among small firms and members of his own party, the Guardian reported, citing unnamed Treasury sources.

Hammond told the Conservative Party's heavyweight right-wing 1922 committee of MPs he was in “listening mode” over the policy, which will see rates rise by 13% in his own Runnymede and Weybridge constituency, the report added.

Small business faces sharp rises in business rates, effectively a tax on their premises, after the first revaluation in almost 10 years.

The sources cited Hammond as telling the MPs he was also aware of the challenges of the growing digital economy. Business lobby groups have said smaller shops could go under as a result of increases, while the online retail giant Amazon would enjoy a cut in the tax bill paid for its warehouses.

“It is a real challenge to the tax system when you have a specific tax based on property. It is very difficult and he told MPs that he was alive to this but that it isn’t something that can be changed overnight,” the source said.

The source added that Hammond had not committed to any changes ahead of his first Budget next month. However, there is vocal opposition within his own party to the changes.

Revaluations are normally meant to take place every five years, but the last one, scheduled for 2015, was controversially delayed amid accusations the government was stalling to avoid any fallout in the General Election of that year among Conservative heartlands.

The government rejected suggestions it had rate rises by 5-7% in a private letter sent to Conservative MP.

An email to Tory MPs from Communities Secretary Sajid Javid and Treasury Chief Secretary David Gauke stated there had been “a relentless campaign of distortions and half-truths” about the revaluation and said most firms would not see a rise.

However, separate analysis by ratings agency Gerald Eve and the Liberal Democrats said figures had been underestimated and failed to 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.

Tory MP Andrew Bridgen, who spoke at the 1922 Committee meeting with Hammond, said he believed the figures in Javid’s letter “might not be giving the picture that businesses in the real world are going to get next week when they get their rates revaluations”.

“The reality is that bills are going out next week and the suggestion was my seat would be having on average a 1.3% reduction in business rates. I think we’re going to see a 3% rise dropping through the letterboxes in my constituency,” he told the BBC on Tuesday.

“We haven’t had a revaluation for seven years and I think it’s going to come as a bit of a shock to some businesses,” he said, citing one small business owner he had spoken to whose rates are going up from £50 a month to £700 a month.

“If we are anything in the Conservative party, we should be the party of business and commerce,” he said.