Small shops protest over 'outrageous' business rates

Small shops in London have hit out at the "outrageous" 82 per cent rise in business rates in the capital.

The Government is set to raise almost £5 billion from London businesses in rates this year - a quarter of the national total - compared with £2.72 billion 10 years ago, according to new figures.

It is one of the fastest-rising taxes and from London alone yields almost as much revenue as wine and spirits duties.

Business leaders say the tax falls disproportionately on smaller enterprises when rents, used as a benchmark for business rates, are pushed up by big chains.

Many London firms also face an extra 2p business rate from 2010 which will help to pay for Crossrail.

Business rate rebates are concentrated on charities - many of which run chains competing with small shops - and rural businesses such as village stores.

James Lowman of the Association of Convenience Stores said: "There is this notion of 'the last store in the village' but there are many areas of London where if you have no car and are not very mobile you are cut off."

Tony Arbour, Tory GLA member for south-west London, said: "This is an outrageous example of London subsidising the rest of the UK."

Stephen Greene, president of the London Chamber of Commerce and Industry, called for a reworking of the Barnett formula, which gives Scotland, Wales and Northern Ireland a disproportionately large share of tax revenues collected from areas such as London. "It is vital we continue to invest in 'London plc' to secure the future of the wider economy," he said.

The Department for Communities and Local Government said the "rateable value" of a property was based on the expected rental value, adding: "London has more properties and therefore businesses with higher rateable values than the other English regions."