Labour: Business rates a 'ticking time bomb' for small companies

Business rates are a "ticking time bomb" for small companies, and the government should ensure there is emergency transitional relief for firms facing "cliff edge" increases, Labour has said.

Following pressure from business groups and some Tory MPs, Communities Secretary Sajid Javid announced extra help for small firms last week, which will be announced in the Budget next month.

The government has already created a £3.6 billion transitional fund to help businesses facing sharp increases when the levy is updated for the first time since 2010.

Shadow business secretary Rebecca Long-Bailey has called for "immediate" relief to prevent thousands of companies going out of business.

• Sainsbury's boss urges rethink over business rates reform

Labour's plan would include a fund worth £150 million a year for the next three years for small and medium-sized firms at risk of bankruptcy due to "sharp and unmanageable" increase.

It would be distributed by councils, with the cost covered by central government, and in the long-term the system should be reformed to ease the burden on high streets and town centres, Labour said.

Ms Long-Bailey said: "From delaying the revaluation to their failure to put adequate transitional arrangements in place, the Government have mishandled this whole process, and should provide immediate emergency relief to stop thousands of businesses going under.

"But the reality is that business rates are a ticking time bomb. It cannot be right for smaller town centre retailers to be facing massive hikes while the Amazons and ASOSs of this world have their business rates cut."

• Chancellor 'listening' to business rate hike concerns

Chair of the Federation of Small Businesses (FSB) Mike Cherry said: "Business rates are an outdated tax.

"FSB is keen for all political parties to help those small firms hardest-hit by the current revaluation, and to start to focus on fundamental longer-term reform of business rates to make sure it's fair for small firms."

Andrew Silvester, deputy policy director at the Institute of Directors, said: "It's hugely important that politicians on all sides look for constructive ways to reform business rates.

"This is a 20th century system and in a 21st century economy, it looks painfully out of date."