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Midland firms say soaring business rates are stopping them from recruiting

Birmingham companies paid a total of £459 million this year and are set to face a 3.2 per cent increase next spring

Firms say soaring business rates are stopping them from recruiting after it was revealed they will jointly pay an extra £14.7 million next year.

Birmingham companies paid a total of £459 million this year, and as rates rise in line with September’s retail prices index, they are set to face a 3.2 per cent increase next spring.

The British Chambers of Commerce is now urging George Osborne to freeze business rates for two years in his Autumn Statement on December 5

Gerry Dunne, managing director of city engineering firm Westley Engineering, said: “We pay an astronomical amount of rates for our building.

“We used to be in an old factory in Selly Oak in 2008 and the rates were about £8,000.

“Now we have moved to a new factory our rates are closer to £50,000.

“You would think when you move from an old factory to a new one, which is better for the environment, there wouldn’t be much difference, but that is two or three people’s wages.”

Chambers are calling on the Government to review and reform the business rates system by 2015, with a more “responsive and transparent” system enacted early in the next parliament.

A two-year freeze would cost the Exchequer £1.7 billion, or 0.1 per cent of total spending.

CVS Commercial Valuers and Surveyors claims the increasing tax burden is crippling the 45,000 Birmingham businesses which pay them.

The firm said 83 per cent of businesses from the city have yet to appeal their rateable value.

The Post recently reported that the amount of rates Birmingham City Council collected for government rose by 8.9 per cent last year.

It represented one of the largest increases across the country, with the West Midlands raising £1.45 billion for the Government’s coffers as a whole, a 3.7 per cent rise.

A CVS spokesman said: “The Government continues to avoid solutions to improve the business rates system, such as a move to using the Consumer Price Index instead of the RPI as a base for inflation of rates, and grounds to allow for appeal based on economic circumstance.

“Businesses in Birmingham should consider an appeal as a way of reducing their rates liabilities.”

Last April’s 2.6 per cent rise in business rates followed a 5.6 per cent increase in 2012 and 4.6 per cent in 2011.

The British Chambers said companies faced the highest business rates bill in Europe, double the combined level of business property taxes in Germany and France.

The lobby group said a business rate freeze could be accommodated within the government’s fiscal plan, for instance by using some of the estimated £11.5 billion underspend from last year.

It said a new system should be fair for businesses across the UK, flexible enough to respond to changes in the economic cycle and defined according to an appropriate measure of business costs.

John Longworth, the BCC’s director-general, said: “There is no question that the business rates system is broken. This is a tax that hits companies of all sizes long before they a make profit, and acts as a drag on business growth and investment.”

 

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