The Chancellor’s 11th hour decision to back down over business rates is a step in the right direction but still not enough to help retailers, according to industry groups. Business rates were due to rise across the

board by 5% on April 1, but after mounting pressure from various interested business groups and organisations, Alistair Darling backed down.

On the day before the increases were due to kick in he announced the amount would be spread over three years, with 2% to be paid in the first year and 3% over the remaining two years.

Sue Robinson, director of the The Retail Motor Industry Federation (RMIF), said: "Shelving the business rate increase until the economy recovers would have been preferable to the lower and deferred rate increase.

"The government needs to address the concerns of businesses and recognise that in the current difficult trading conditions, any cost increases could have a negative impact on financial viability.

"We are continuing to speak to government to put the case for retailers."

Meanwhile, leading business organisation the CBI welcomed the announcement but said more needed to be done.

Richard Lambert, CBI director general, added: "This is a step in the right direction, helping companies at a critical time by improving cash flow.

"We welcome the announcement but have been campaigning for a two-year freeze on business rates instead of the 5% rise that is still being applied over time."

The Association of Convenience Stores (ACS) warned that there were still serious concerns over other rises expected next year following the latest revaluation of the rateable value of properties.

This will affect business rates from April 2010, and there are fears that this - added to the government’s planned supplementary rate - could send retailer bills rocketing.

ACS chief executive James Lowman said: "We remain concerned at the impending costs associated with the 2010 rate revaluation which will heap further costs on local shops, and the supplementary business rate which will give councils more powers to raise money from business rate payers." He added that the Chancellor’s announcement should be the first step towards a fairer rates system for businesses.

For more on the business rates issue see News Extra on page 10.