Sir Michael’s recommendation, published in his inquiry into local government on Wednesday, caused widespread panic in the sector. The mandatory relief has been valued at £724m a year. If removed, it would hit charity shops, offices and even historic buildings under the care of charitable organisations.
“It was like having an incendiary bomb lobbed at us,” said Stephen Bubb, chief executive of Acevo.
But local government minister Phil Woolas confirmed that charitable relief would not be included in any future review of business rates reliefs and exemptions. “We have no plans to change the existing relief given to charities,” he said.
Sir Michael said the relief for charities had prompted complaints from small businesses. “Some business organisations such as the Forum of Private Business feel that the existence of this relief helps some charities to unfairly undercut other high street businesses,” he said.