...but mayors will get powers to raise bills by another 8%

STRUGGLING firms face further business rate rises of up to 8 per cent under new powers for directly elected mayors.

Mayors in England’s largest cities will be able to impose the increases on top of existing bills to fund infrastructure improvements. They are getting the powers under the Local Government Finance Bill which is going through the Commons.

It is likely to enrage the hundreds of thousands of businesses already facing huge rates hikes in the first revaluation for seven years.

The Federation of Small Businesses attacked the move. National chairman Mike Cherry said: ‘The last thing small businesses need is to get slammed by more rates hikes when many are already being hit by huge rises. Huge business rates rises threaten small businesses and will mean job losses and price hikes.’

Communities Secretary Sajid Javid is already under pressure over the revaluation which will see 500,000 firms pay up to 300 per cent more.

Yesterday one of his junior ministers, Marcus Jones, confirmed that elected mayors of the new combined authorities which bring together groups of large cities will be able to impose further increases from 2019.

Eight combined authorities have been, or will be, set up in England. They are Cambridgeshire and Peterborough, Liverpool City Region, London, Greater Manchester, Sheffield City Region, Tees Valley, the West Midlands and the West of England.

Elected mayors will be able to impose an infrastructure supplement, worth 2 pence in the pound on the rateable value of a property, and a business rates supplement worth the same amount.

Business rates are based on a firm’s rateable value using a multiplier of 48p in the pound. If the rateable value is £100,000, the rates will be £48,000. The new Bill means elected mayors will be able to add 4p to the multiplier. This rise, from 48p to 52p, is equivalent to around 8 per cent.

During a debate on the Bill Mr Jones was asked whether the rises would be a burden on business. The local government minister said: ‘In theory it’s certainly possible that businesses could be liable for a number of different settlements.

‘However the purpose of each of these will be to deliver direct new benefits to businesses involved.

‘The businesses involved will also be able to frame the nature of those improvements either through ballot or extensive engagement and consultation so we do believe there are significant safeguards.’

But Lib Dem leader Tim Farron said: ‘The Government are using elected mayors to create a tax time bomb on small businesses in our big cities.’

Labour MP Gareth Thomas called for a review into business rates but Tory MPs outvoted Labour.

Last night a government spokesman said: ‘Business rates supplements have been in place since 2009.

‘These plans would require mayors to consult with and get the backing of local businesses if they want to charge an infrastructure supplement. They will only be able to use supplements to fund projects in their area which will benefit the local economy.’

‘Tax time bomb on small businesses’