Local councils are to be given the power to reduce business rate bills. 

Communities secretary Eric Pickles has announced he intends to introduce powers for discretionary business rates in the forthcoming Localism Bill.

Pickles, who stressed the importance of small shops and businesses, hopes these discount powers will give councils the ability to respond to local circumstances and reduce rates to support shops if they are struggling or if they are looking to encourage new businesses.

“We are determined to give councils a genuine financial stake in their local economy and let them target their support at local shops. pubs, post offices and start-up enterprises,”  he said.

The government also hopes to simplify the process for claiming small business rate relief in England by removing the legal requirement to submit an application form and automatically working in the relief when calculating rates. The Localism Bill is expected to be published in early December.

The proposals were welcomed by Association of Convenience Stores chief executive James Lowman. “This new power will give councils better flexibility than the existing small business and rural rate relief schemes that only apply to a small number of shops,” he said. 

“Businesses entitled to small business rate relief should not have to cut through red tape to claim.”

Lowman expressed concern over how relief would be funded. “At a time when council funding is being cut dramatically the scope for funding rate relief of this kind may be limited.”

The Federation of Small Businesses also welcomed the rent relief proposals. “After rent and wages, rates are the biggest cost to many businesses and steps to help small firms automatically get the relief they are entitled to is welcome news,” said FSB national chairman John Walker.