Latest Public Sector News

02.03.15

Businesses back council control of business rates

More than two-thirds of UK businesses agree that councils should be able to set business rates locally, according to a new a poll.

The Local Government Association (LGA) surveyed 500 firms and found 68% of businesses across the UK agree that business rates should be set locally in discussion with local businesses.

Just 7% of businesses disagreed.

LGA chair Cllr David Sparks said the results showed that businesses have lost faith in the current system.

Property consultancy firm Daniel Watney warns that the government is considering scrapping business rates relief to claw back £2.4bn at the expense small firms and charities. The company says that a recent government discussion paper sets out the extent of reliefs granted in England in 2013-14 and then asks companies if and how they have been using these reliefs to avoid paying full business rates.

Debbie Warwick, head of Business Rates Services at Daniel Watney, has written to the heads of more than 50 business groups warning them to respond to the “innocuous looking discussion paper” before the deadline in a bid to highlight plans that she believes would hurt charities and small businesses.

Under the current system the government sets a national multiplier to calculate business rates, which is applied to local property values. Whitehall also controls the application of reliefs within the system and keeps half of income and growth, which it redistributes to town halls in grants.

Cllr Sparks said that this hugely restricts the ability of councils to reduce business rates for the types of shops and businesses that residents want in their high streets or to help new firms open and keep small businesses alive. 

“The current system of business rates is not fit for the 21st century and is preventing councils from supporting small businesses and boosting high streets as much as they would like,” he said.

“Councils could do much more to support small businesses if we were given the freedom and finance to set rates and discounts locally. We could also invest in infrastructure and vital local services if all of the money a business paid was retained by local government.”

The poll also found almost half (47%) of UK businesses are concerned about the impact on their business of cuts to council services, such as road maintenance, planning and licensing, over the next few years.

Support for locally-set business rates was particularly strong among companies in the manufacturing (73%) and service industry (72%), and was also particularly high among businesses in the south-east (83%), the north-east and Yorkshire & Humber (76%).

Cllr Sparks added: "Councils and the majority of businesses agree that it is essential that any reform of business rates must make it a truly local tax which gives them freedom to work together to boost growth and ensure local economies and businesses thrive.

"The government has committed to a long overdue review of business rates and councils are calling on them to publish its Terms of Reference as soon as possible. The LGA looks forward to playing a full part in the review."

(Image source: Adam Tinworth)

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