Firms could be faced with a large increase in business rates next year, a leading business group has warned.
Under the present system, the Retail Price Index (RPI) rate of inflation for September is used to determine the annual rise in business rates in England and Wales which comes into effect in the following April.
The British Retail Consortium (BRC) has pointed out that the RPI for September stood at 4.6 per cent, down just 0.1 per cent from the August figure.
The BRC said that, unless the government takes action, many businesses could have to deal with a rate of increase for which they had not budgeted.
Stephen Robertson, the BRC’s director general, commented: “No one seriously expected inflation to fall so stubbornly slowly from the highs of January and February. As recently as this spring most forecasters expected RPI to be significantly lower by now.
“Basing a whole year’s rates bills on one, almost random, month’s RPI makes no sense. The government must switch to another way for next April and beyond.
“Using the Consumer Price Index (CPI), as it does for pensions is one option. Or using the 12-month average RPI rate from October 2009 to September 2010, which would iron out inflation rate volatility.”