The government has succumbed to pressure to change the way business rates are calculated in a move that could save retailers £250 million.
On Saturday the government announced its commitment to base business rates calculations on the Consumer Price Index (CPI) inflation rate from 2020, after speculation plans to switch had been scrapped.
In the 2016 budget the government announced plans to switch to the CPI, as the Retail Price Index (RPI) currently used rises faster and can outpace growth, but after the general election was called the bill failed.
Many also speculated the change would be scrapped and the money would be used to fund the public sector pay crisis,
However, the Treasury released a statement quelling these concerns over the weekend which read: “We are committed to switching business rates indexation from RPI to CPI from 2020 and will introduce legislation in due course.”
The Treasury added this would save businesses £1 billion in the first three years, with retail saving £250 million alone.
Despite this, business rates specialist CVS said until the change is made in 2020 rising RPI, inflation could cost business an extra £781 million.
“The Chancellor has moved quickly and decisively to quell speculation,” CVS chief executive Mark Rigby said.
“Reneging upon the switch would have been a double whammy for business with higher than forecasted inflation this year and its compound effect.
“The purse strings at the Treasury need to be loosened as Property Taxes are already the highest of any G7 and EU country.
“They need to be competitive especially when we leave the European Union and the switch in uprating goes someway to working towards that.”