Soap Box

Author: Paul Wheeler, Political Skills Forum (on   |  

When I worked for NFC in the 1980s, I remember we took the roof off a perfectly-usable warehouse to avoid a punishing 25% increase in business rates, courtesy of Camden LBC and the GLC.

As part of the post-poll tax settlement in 1990, business rates were centralised into the national non-domestic rate (NNDR), and there they have remained – like Sleeping Beauty, immune to any case for localism.

And it’s big money. Westminster collects more than £1bn from its businesses – more than that collected by Manchester, Liverpool, Newcastle and Birmingham combined.

With such huge sums, it’s not surprising that the recently-announced government review into the business rate has aroused strong feelings. There is a fear it could lead to a small number of councils in central London gaining a lot, and almost every other council losing out. Yet reform is vital, if we are to provide incentives for local councils to promote economic growth.

Into this lions’ den, Localis, has stepped forward with a thoughtful contribution to the debate – The rate escape – freeing local government to drive economic growth.

In a short column, I cannot do justice to its detailed argument. Essentially, it revolves around allowing each council to voluntarily ‘opt-out’ of the annual redistribution of the formulae grant until the following business rates revaluation, and enable those councils to keep all of the business rates collected locally.

Unlike full localisation of business rates, this scheme does not remove current net beneficiaries from business rate redistribution. It also provides reassurance to business, nationally and locally, by maintaining the current national system for setting business rates.

While not part of the original report, there is also scope to link such an approach to combinations of councils, including the newly-formed local enterprise partnerships to provide strong incentives for inward investment.

Will the Government listen? With economic growth being the top priority, there may be a unique opportunity to restore financial autonomy to local councils. Perhaps Localis will be the Prince Charming that the reform of local government finance has been waiting for!

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