Winchester Businesses in rate Relief Shock

Businesses throughout Winchester received a nasty surprise last week when new bills landed on their doorstep. Mark Oaten has therefore today written to Lord Mandelson, Secretary of State for Business, criticising plans to increase business rates in a recession.

Business rates are based on a complex multiplying formula conducted each year by the Valuation Office Agency. However legislation has always provided “transitional relief” for businesses to ensure their rates do not rise steeply from one year to the next.

However the current rating cycle of five years is the first time that this transitional relief will not apply to the final year – in this case 2009 to 2010. This means that Winchester businesses are being faced with huge increases on their business rates – sometimes double their existing rate – in the middle of a worsening recession.

Mark, along with Liberal Democrat Prospective Parliamentary Candidates Martin Tod, for Winchester, and Liz Leffman, for the Meon Valley, have been contacted by numerous businesses who were notified by post last week of these increases.

At a time of severe economic turmoil many fear they will not be able to afford the new rates and will be forced out of business. Winchester City Council have acknowledged the problem and Mark would encourage all businesses facing difficulties to contact the Council to discuss how to access their hardship relief scheme.   

Mark Oaten commented:

“I couldn’t believe it when the first company contacted me last week about this – I thought it must have been a mistake. Why on earth would the Government allow these rate changes to come in smack back in the middle of the worst recession since the 1930’s?

“Businesses are struggling to get by – checking their balance sheets every day, not every month. Just this weekend I was contacted by another business in trouble.

“I am happy to try and help any businesses in any way I can and I would also strongly urge companies to talk to the Council to see what can be done. But just how this was allowed to happen I do not know and I have made my feelings known to the Minister.

Martin Tod added:

"It's madness to have huge above inflation rate increases at the beginning of a recession. The Government needs to restore the caps on the amount that the rates can be increased for the duration of the recession.  

“We also need to return the rates to local control. This centralised bureaucratic system is producing absolutely crazy results that are completely out of touch with reality."

Liz Leffman also commented:

"For small businesses struggling to survive in the current economic climate, this hike in business rates could not have come at a worse time. Most of the businesses in Meon Valley are family-run enterprises, they employ local people and contribute to the vibrancy of our local communities. The decision to increase business rates will do nothing to support the local economy.

Letter sent to Lord Mandelson:

Lord Mandelson

DBERR

1 Victoria Street

London

SW1H 0ET

23^rd March 2009

Dear Lord Mandelson,

I am writing to you to express my grave concern with the steep business rate rise that many SME’s within my constituency will not be able to afford.

I have been contacted by numerous businesses who received last week, in the mail, notice that their business rates would rise, in some cases even double. Upon investigation, and following correspondence with Winchester City Council, I understand that this is because the current five year business rate formula did not allow for transitional relief to be applicable during the last year of its cycle.

Whilst I understand that when this legislation was put in place the country’s economy was vastly different I am still surprised that it was allowed to be implemented during a recession. I know, from speaking to local businesses, that this could prove the tipping point for many of them.

I would strongly urge the Government to consider reversing this rate increase as a matter of urgency. A recession is, I am sure you will agree, no time to be placing further financial strain on businesses.

I look forward to hearing from you, and for your information a copy of this letter has been sent to my local press.

Yours sincerely,

Mark Oaten MP