669                                             29 November 1994




TRANSITION SCHEME FOR 1995 BUSINESS RATES REVALUATION
ANNOUNCED


     Proposals for new transitional arrangements to phase in
business rate increases arising from the 1995 revaluation in
England were announced today by Environment Secretary John
Gummer.

     Welcoming the pounds 605 million package of Exchequer support for
business rates across Great Britain announced by the Chancellor
in his Budget statement, Mr Gummer said in a reply to written
Parliamentary Questions from Edward Garnier MP (Harborough):

     "The 1995 revaluation will not lead to any significant
change in overall rateable values in England.  We therefore
propose to set the poundage for England next year at 43.2 pence,
in line with the increase in the RPI in the year to September
1994.  


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     "However, the revaluation will result in significant local
and sectoral shifts in rateable values.  My Department's
consultation paper, published last month,  outlined proposals for
transitional arrangements to phase in the effects of these shifts
on rate bills.  In the light of responses to that paper, and the
generous package of support announced by the Chancellor today,
I now propose that no business will face year on year increases
of more than 10%, after allowing for inflation.  For property
with a new rateable value of less than pounds 10,000 (pounds 15,000 in
London), the maximum real increase will be 7 1/2%, while for many
small shops combined with living accommodation, the corresponding
limit will be 5%. 

     "We estimate that nearly 1 million smaller properties and
1/4 million larger properties in England will benefit from relief. 
One-third of beneficiaries will be shops.  A further 170,000
properties will see reductions in their bills as a result of the
revaluation.  I am sure this will be widely welcomed by the
business community.

     "The Exchequer contribution will cover part of the cost of
the scheme.  The remaining element will be met by limiting real
reductions in rates bills, as proposed in the consultation paper. 
For 1995/96, the limits will be 10% for small properties and 5%
for large ones.  

     "Other details of the scheme will be as proposed in the
consultation paper. Regulations giving effect to these changes
will be laid before Parliament shortly."





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NOTES FOR EDITORS


The Uniform Business Rate was introduced in 1990 to ensure that
the rates on business properties of similar value are the same
throughout the country. Its introduction was accompanied by the
first non-domestic revaluation since 1973.  The Government is
committed to further revaluations every five years, the next
taking effect from 1 April next year.  Drafts of the new rating
lists will be available for inspection at town halls at the turn
of the year. 

Changes in total rateable value at a revaluation have no
significant effect on the overall real terms rates yield in the
long term because the level of the uniform business rate poundage
adjusts automatically to keep it broadly constant.  But the
pattern of changes will vary across the country, with some areas
and sectors gaining and some losing.  In order to phase in the
more significant changes, the Government has recently consulted
on proposed transitional arrangements to reduce the increases of
those facing higher bills.  The Secretary of State's announcement
outlines the Government's decision concerning the changes in
England (there will be separate announcements for Wales and
Scotland).  

The transitional arrangements will work by limiting year on year
increases from a baseline bill calculated by reference to the
rates bill for 31 March 1995.  It is envisaged that the limits
would be the same for the 5 years up to the next revaluation in
the year 2000.  As announced in the Chancellor's Budget
Statement, part of the cost will be met by an Exchequer
contribution.  The total GB cost will be pounds 605 million, of which
pounds 505 million will support the cost of the scheme in England for
1995/96.   

The remainder of the cost of the relief will be funded by
limiting real rate reductions.  For 1995/96 the proposed limits
are 10% for small properties and 5% for large.  It is estimated
that similar limitations will be needed for 1996/97, after which
reductions should start to come through much faster.  The limits
for 1996/97 and subsequent years will, however, be reviewed next
year to ensure that the costs of the transitional scheme are kept
in balance.
   


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