An announcement by chancellor George Osborne that he would abolish the current system of business rates and replace it with a system which allows local authorities to set business rates themselves has been slammed as “another bitter blow to business pragmatism" by the PRA.

Speaking at the Conservative Party conference in Manchester, Osborne called the new plans the “biggest transfer of power” in recent history. He stated that councils would be able to cut rates to attract new business while others may be able to raise rates to boost income. Overall, local authorities would hold on to the full £26bn a year raised from business rates, so consigning the Uniform Business Rates (UBR) scheme to history.

PRA chairman Brian Madderson commented: “The radical restructuring of business rates which the retail industry was promised has not happened. Instead, the now well-worn path of ‘localism’ that we have already seen failing with the National Planning Policy Framework (NPPF) is being imposed on us. Devolution does not always provide the best answer for business.

“PRA members have tried and failed with many local authorities to obtain rates relief for small rural filling stations to prevent their closure. They have also appealed for relief on cash machines (ATM) at filling stations with little success. This is down to central government squeezing funds for local authorities on the one hand, and on the other encouraging them to raise more revenue from business rates.

“Many local authorities now employ sub-contractors to identify properties including ATMs that have not previously been rated as a means of bolstering their income.

“Our larger members have networks of filling stations which involve multiple local authorities. There will be an unwelcome increase in time and cost to appeal rating decisions made in each area. It will provide uncertainty as to costs. It could even lead to unfair competition between filling stations in adjacent local authorities which have significantly different rates.

“We believe that this proposal is just another example of a government completely out of touch with the retail business community – similar to the recent proposal for a ‘living wage’.”

Association of Convenience Stores (ACS) chief executive James Lowman said: “The chancellor’s decision to devolve business rate setting powers comes as Government is supposed to be considering responses to a large scale review of the business rates system, of which we have heard nothing yet.

“One of the consequences of locally set business rates will be that local authorities under financial pressure may be tempted to increase business rates to foot the bill which is why business owners need certainty through a clear national framework. We urgently need to see more details of the chancellor’s plans, and we need reassurance that local shops and other businesses will not see higher rates bills as a result of this policy.”

The Government’s consultation on a wider review of business rates was expected to report by the 2016 Budget.

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