Business rates changes 'spell financial disaster for Shropshire'
Business rate changes will save rural firms money – but cost Shropshire Council up to £8 million and spell "financial disaster", an MP said today.
Concerns over the changes have prompted MP Daniel Kawczynski to write a protest letter to the Government.
He said he welcomed a fairer deal for businesses, but said it could bring chaos to rural councils like Shropshire.
Rural businesses will now be able to apply for the same rate relief as those in urban areas.
Small business rate relief will be doubled from £6,000 to £12,000 from April.
Last autumn the Government also announced that rural rate relief will increase from 50 per cent to 100 per cent from April, saving a business up to £2,900 a year.
But this will bring in significantly less revenue to councils – and the Government has not made it clear if it will be making up the full difference.
In a letter to the treasury, the Shrewsbury & Atcham MP has highlighted the issue Shropshire Council already has with adult social care, as it faces a year-on-year cost rise of around £8m because of a disproportionately elderly population.
He said: "Overall I very much welcome Small Business Rate Relief changes as they will significantly assist our rural economy.
"Rural Rate Relief is also very positive as this will ensure that small businesses in rural areas access the same level of business rate relief as those in urban areas.
"For business at least this is a fairer deal – but based on initial projections these changes could unfortunately remove £3m to £4m from Shropshire Council's resources. With 100 per cent business rate retention, this could double to £6m to £8m. That would be around 10 per cent of our total business rates income."
Mr Kawczynski said he was concerned a plan to supplement lost income with a Government grant would not cover the reduction faced by Shropshire Council, adding: "Shropshire will once again be promised fair funding and adequate compensation for changes made by Government and will receive only temporary respite before being force to deal with a further, potential, permanent £8m reduction in its funding."
There are conditions to the Government's changes, such as making business rate relief available only to businesses in rural areas with a population under 3,000.
