Darling backs down over 5% business rate rise

In a last-minute reprieve, the Chancellor said that the rate rise, which applies only in England at present, would be scaled back to 2 per cent this year, and that businesses could spread payments of the remaining 3 per cent increase between 2010 and 2012.

The Conservatives claimed victory over the climbdown by Alistair Darling. Caroline Spelman, the shadow Local Government & Communities Secretary, said: "We welcome this U-turn because in large part it follows the campaign we have mounted asking the Government to look again at the impact business rate increases will have at this time of recession."

The scheme will now allow business owners to defer about £600 million relating to 1.6 million properties, the Department for Communities and Local Government (DCLG) said. More than half of all councils have reported that businesses in their area are having difficulty meeting their business rate bills, and about 85 small businesses are failing every day as they grapple with slumping consumer demand and tighter credit conditions.

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