The government's plan to allow businesses to defer the 5% increase in business rates has been criticised as no help by trade bodies and retailers.

The scheme will allow businesses to defer payment of 60% of the increase in their 2009-10 business rate bills until 2010-11 and 2011-12. Announcing the last-minute policy change, chancellor Alistair Darling said: "The government recognises that businesses need help now to ease their cash flow at a time when money is very tight. This measure will help businesses to smooth their rates payments over the next three years."

The new business rate regulations are expected to come into force by the end of July.

Simon Biddle of Biddle's Convenience Store in Redditch, Worcestershire said that while the deferral scheme may appear to be helpful to retailers, the increase will still have to be paid eventually. "I'd much rather know where I stand with the money I'm paying out than having it on my mind for the future. It's not as if you can put the money away and earn interest on it so it may be better to just pay it off."

ACS chief executive James Lowman commented: "This eleventh-hour decision will provide some relief to local shops. However, we remain concerned at the impending costs associated with the 2010 rate revaluation which will heap further costs on local shops, and with the supplementary business rate which will give councils more powers to raise money from those paying the business rate."

British Chambers of Commerce (BCC) head of policy Kevin Hoctor said that deferring payments may cause difficulties in the future. "Staggering the cost is still an increase and it will be complex. Businesses will still be hit at a time when they have restricted cash flow and growth."

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