Welcome for Osborne’s rates reform – but assurances are needed over impact on business

October 5, 2015
By

Firms will want assurances that the business rates reform announced by the Chancellor this week will not more higher taxes.

That’s the view of Business West, the region’s largest business organisation representing 16,000 firms and which runs the Bath Chamber of Commerce.

George Osborne made the surprise announcement at the Conservative Party conference that by 2020 local government will be able to retain 100% of locally raised taxes – including all £26bn of revenue from business rates – to spend on local services.

Business West said business rate reform had long been a priority as the current system was not fit for purpose. But its managing director Phil Smith, pictured, said members were fearful that it could trigger bad spending decisions by local authorities.

He said: “Here in the South West we are constantly hearing cries of the impact of a broken business rate system. So it is odd for the Chancellor to announce major changes to business rates without consulting with the business community that ultimately foots the bill.

“Greater control of business rates could give local authorities more incentives to cultivate local business growth and invest in local economic improvements. However, when surveyed our members voice strong scepticism that local authorities have the track record or capabilities to deliver and there is a real concern about a lack of accountability of many town halls in listening to local businesses and getting the basics right.

“The detail of the Chancellor’s plan is critically important. Businesses will want assurances that greater local control over business rates does not translate to more taxes with little or no business benefit.”

In his conference speech, Mr Osborne said he would abolish the Uniform Business Rate and give local authorities the power to cut business rates to boost enterprise and economic activity in their areas. Local areas which successfully promoted growth and attract businesses would keep all of the benefit from increased business rate revenues.

Those areas which chose to have city-wide elected mayors would get even greater flexibilities, also being given the power to increase rates for spending on local infrastructure projects, as long as they won the support of local business.

The move was also welcomed by the CBI in the South West. Regional director Deborah Waddell said: “If this bold announcement on business rates is a way to cut them, it will spur councils to take a pro-growth approach, and has the CBI’s support.

“Taken together these changes represent the largest ever shake-up in local government – so elected representatives should work with businesses to get any changes right without adding further layers of complexity.

“We also need to see an overhaul of the outdated business rates system. Switching the uprating from RPI to CPI, exempting smaller properties from the system, and more frequent valuations will help to boost jobs and investment right across the South West and beyond.”

 

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