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Spring budget 2017: Chancellor offers business rates relief as MoJ cuts continue

With business rates relief and tax rises for the self-employed stealing the limelight in today’s budget, government documents also reveal deeper cuts to the Ministry of Justice (MoJ), with its spending slashed by 15% over the next three years.

Although not mentioned in the budget speech, the MoJ’s current £6.9bn allocation is set to fall to £6bn by 2019/2020. This will represent a fall of more than 30% over a decade, as it stood at £8.9bn in 2010/2011.

The then Chancellor George Osborne outlined plans in the government’s Spending Review 2015 to ‘deliver efficiencies’ in the prisons and courts systems which included a 50% reduction in the MoJ’s admin budget by 2019-20.

Meanwhile, Chancellor Phillip Hammond tried to take the edge off sharp increases in business rates, trying to relieve thousands of concerned City firms with a £435m fund for thoses facing large increases due to higher rates.

He also pledged that no business losing small business rate relief will see their bill increase next year by more than £50 a month.

‘I am listening to the voice of business. We are making Britain the best place in the world to do business,’ said Hammond.

Berwin Leighton Paisner (BLP) co-head of real estate disputes Roger Cohen (pictured) said: ‘The Chancellor’s £435m savings on business rates are welcome, and not just in my local pub.’

‘I would expect the budget to be fairly neutral for the biggest City law firms, it won’t add to or reduce much the amount they will pay. Nothing changed today for them, the change is more around the middle to lower market.’

While not much detail is available yet on the discretion given to local authorities and further consultations are scheduled, according to Cohen this will not make much difference to businesses which pay most tax. He added: ‘The Chancellor is seeking to help smaller rate payers.’

As recently reported, increases in business rates were met with concern last month by real estate professionals and lawyers in the Square Mile as City of London offices faced a 33% increase to their rates, which are calculated against property values. The plans to boost business rates following a seven-year hiatus would see average rates increase from £876m this financial year to an average of £1.16bn a year over the next five years, according to property agent CVS. This represents a £1.4bn rise in total over five years.

BLP led a challenge made by a consortium of trade bodies, with Olswang and CMS Cameron McKenna also signing a letter to parliament’s joint committee on statutory instruments.