A London MP has pledged to use devolved business rates to support independent businesses – but concerns are rife that stores will be at a disadvantage under the new regime.

Following George Osborne’s announcement that London boroughs would begin to retain 100% of rates as early as April 2017, James Berry, MP for Kingston and Surbiton, said businesses would see more return on investment.

“This move will help us to support smaller, independent businesses across the borough,” he said.

However, a report by the Communities and Local Government Select Committee suggested the Government is likely to scrap local funding grants when rates are devolved. This could encourage councils to increase rates to make up for the cuts, as authorities will have the ability to set rates at their discretion.

The committee suggested that councils should be allowed to vary business rates to fit the type of business that is paying them and that a levy should be introduced for online retailers.

According to the report, local authorities were also setting aside large amounts of money in case appeals from rates payers were successful, an issue the committee said was being “repeatedly ignored” by Government.

It suggested a number of alternatives for the Government to consider, including funding successful appeals separately to the rates retention system. 

Concerns were also raised by the ACS, which argued that councils were already failing to use their discretionary powers to grant rates relief.

“We welcome further debate about how internet retailers should pay their fair share, as they currently have a huge advantage,” said James Lowman, ACS chief executive.