Business rate devolution supported by nearly all councils
Author: James Evison, LocalGov.co.uk |
More than 95% of local authorities want more control over business rates, according to a survey by local government think-tank, Localis.
The survey also discovered almost all councils – 99.5% – want more financial autonomy. But only 77% wanted total autonomy from Whitehall.
The Government unveiled its plans for a finance review to consider returning the business rate to local control this month. It also pledged a second phase of the review, due next month, to look at community budgets – including the ‘continued roll out of these budgets’.
Surrey CC leader, Dr Andrew Povey has already described the move to localise business rates as ‘the ultimate in localism’.
But the Local Government Association has suggested that although such a move was a step in the right direction, away from ‘over-centralised’ control of finances, it has warned the system would have to recognise the imbalance in local economies and ensure the system was fair.
To resolve the issue, Localis has suggested a model, worked out alongside Ernst & Young, which proposes councils buy themselves out of the formula grant for a fixed period of five years. It would allow councils to keep an extra business rates during the period, therefore providing a growth incentive.
The model would be based on the current system of redistribution, and would only negatively effect councils, which saw business rates fall during the set period. An emergency fund would also be set up for local authorities, if large-scale businesses, such as factories, closed during the period.