Minister under fire from own MPs over business rates 'misinformation'

The Communities Secretary has come under fire for apparently misleading his own MPs (BSE: MPSLTD.BO - news) over business rate increases as the row over the issue intensifies.

In an attempt to quell a revolt among Tory MPs over the increases, which many fear could force small shops and pubs to close, Sajid Javid wrote to them saying the unease among businesses was based on "distortions and half-truths".

He attached an analysis of the planned increases but these have now been panned by a rating agency firm as figures from a "parallel universe".

Tory MPs say Mr Javid's analysis does not bear out what they are hearing from businesses in their constituencies.

Conservative MPs and former minister Grant Shapps accused the Government of "spinning the numbers" and said he had urged the Chancellor to drop the rate changes for a review but had been told it was too late.

He said: "It has been suggested by Government this is fiscally neutral but it raises £1bn. Better just to say that, rather than spin it out as something which actually saves businesses money when it doesn't."

A quarter of firms, many of which are small independent shops on local high streets, face significant rises in the first change in rates for seven years.

Businesses will now pay based on how much their property is worth - rather than on the revenue they make. In the South East and London, some could face increases of 400%.

Internet giants such as Amazon with out-of-town warehouses may pay lower business rates.

Chancellor Philip Hammond has assured MPs he is "in listening mode" to their concerns about the changes and that he wants to make sure internet retailers do not benefit at the expense of smaller high street firms.

However, he has not formally committed to introducing measures in next month's Budget to soften the blow.

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In his letter to MPs, Mr Javid claimed business rates would fall in 259 of 326 areas, telling them the changes were "nothing to be afraid of" as 2017-18 is going to see "the biggest ever cut in business rates".

However, according to a study by the agency Gerald Eve, rates will fall in only 135 areas - and increase in 191. It also claims Mr Javid underestimated the rises by as much as 7%.

A Department for Communities and Local Government spokesman said: "This is yet more scaremongering, when in reality the revaluation will mean businesses in 80% of council areas will see an average fall in their business rates bills due to revaluation before inflation."

It has emerged that many of the areas which will be hardest hit by the increases are in Conservative heartlands.

For example, rates in the Prime Minister's Maidenhead constituency are expected to increase by 10% on average - and in Mr Hammond's seat of Runnymede, businesses are bracing themselves for rises of about 13%.

Labour wants to see "transitional relief" for businesses facing "astronomical increases".