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Government's decision smacks of political hypocrisy in light of refusal to freeze business rate increase.

The Chancellor recently ruled out any plans to freeze the Government's controversial 5 per cent increase in business rates at 1st April 2009, which has potentially disastrous implications for many UK retailers.

With the Government's 2.5 per cent cut in VAT having done little to alleviate the pain felt on Britain's high streets, with many retailers struggling in the recession, the proposed 5 per cent increase in business rates could be the last straw for many of our shopkeepers.

What makes the Chancellor's decision all the more bizarre is that Housing Minister Margaret Beckett has just announced new support to help councils cut their planned rent increases for tenants in the current economic climate.

According the Communities and Local Government the average guideline rent increase for 2009/10 will be halved from 6.2 per cent to 3.1 per cent for local authority tenants, to encourage councils to reduce the amount tenants would have to pay for the coming year.

The changes to the guideline rent increase means tenants should see a marked drop in their proposed average rent increase for the coming year from around £4 per week to approximately just under £2.

Mrs Beckett is reported as saying, "We are facing challenging economic times and it is right that this Government offers real help now to council tenants. We have listened to what councils and their tenants have said to us about the planned rent increases, and we are determined to help tenants get a fair and affordable deal."

In the accompanying announcement the Communities and Local Government state,

'The guideline rents increase for 09/10 was set in September at a time of much higher inflation but the new guidelines will override this and support tenants during the current economic uncertainty, whilst making sure that local authorities still have the money to carry out essential repairs and maintenance.'

Commenting on the planned changes Peter Chapman, head of rating at Cluttons said, "Retail insolvencies and shop closures are an almost everyday occurrence at present but rather than looking at ways to prevent further closures the Government appears hell-bent on adding to retailer's woes. It is hard to see where there is a difference between local authority rents and business rates when both increases for 2009/10 were set last September when RPI inflation was 5 per cent and both may need supporting during the current economic uncertainty. The fact that RPI has now fallen to 0.1 per cent suggests the Government's criteria for helping those groups struggling in the recession is purely based on potential votes rather than sound economics. The Government is clearly cherry picking who it favours and is putting politics before economics."

Although retail generates only 8 per cent of the Country's gross domestic product, this property reliant sector, accounts for over 22 per cent of the billions of pounds collected by local authorities for the Exchequer through business rates.

According to the British Retail Consortium, the planned increase in business rates could add a further £1.6billion to shopkeepers annual bills by 2011. On top of this, the proposed Business Rates Supplement Bill, which has its third reading in the House of Commons this week, will allow local authorities to levy supplementary taxes on companies to pay for local infrastructure projects such as Crossrail.