The Federation of Small Businesses has announced that they believe small businesses in the country should be automatically provided with business rate relief through a new private member’s bill.

The bill is being formulated in conjuncture with the Conservative MP for mid Worchester, Peter Luff, who is also the chairman of the business and enterprise committee.  If the bill makes its way through and is passed as a law, then qualifying businesses will automatically be given relief, rather than having to go through the process of applying for it.

Rate relief is already available automatically in Wales, and Luff and the FSB hope to bring similar actions to England.  Luff said, “The worsening economic situation is having a devastating effect on small businesses.  A recent study shows small businesses are collapsing at a rate of nearly 100 a day. My Bill provides a simple way of easing the pain for many of them.

“Only about half of small businesses know about rate relief and apply for it, despite the fact the Government has budgeted to cover all small businesses. Making these payments automatic would ensure the money gets directly to those who need it.  Rates are the third largest item of expenditure for small businesses after wages and rents, so this relief would make a huge difference.”

Roger Culcheth, chairman of the Federation’s local government committee, has hailed the plans, announcing that, “This move would provide vital support to businesses on the high street struggling with cash flow… and support local economies by ensuring the survival of the high street and the jobs and services it provides. We are pleased to be working with Mr Luff to ensure that a system is set up in England, similar to Wales, where the relief is applied automatically.”

News has surfaced that £400 million has been left unclaimed by those businesses who would have qualified for rate relief for 2006, according to the Local Government Association, who also announced that the relief, if used by a business, could save a businesses up to £2,500 a year.

Culcheth went on to say, “With around 85 small businesses closing a day, this move would provide vital support to businesses on the high street struggling with cash flow. It would support local economies by ensuring the survival of the high street and the jobs are services it provides.”

Small businesses in England have been able to claim up to 50 per cent rate relief since April 2005 and a business is qualified for such relief if the rateable value of their premises is below £15,000 or £21,500 if they are in London.

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