Budget – economic illiteracy

The Chancellor has plunged new depths of economic illiteracy with his changes to the business rate.

The new threshold for small business rate relief will increase from £6,000 to £15,000. Business rates will also be linked to CPI, the official measure of inflation which has historically been lower than the RPI rate to which rates are currently linked.

As always when property taxes are reduced, it will do precisely nothing for business beyond their next rent review; their rents will then be increased, absorbing the benefit of the tax cut. One would think that in the face of all the evidence, the Chancellor would have learned this by now. There is even less excuse considering that Osborne went up to Magdalen College, Oxford in 1990 as a Demy, a winner of one of the college’s fiercely contested scholarships.