Business rates reform must incentivise local growth says London Councils

The Government’s overhaul of the business rates system must be part of a package of reforms of local government finance that must incentivise local growth and drive forward the devolution agenda, London Councils has said.

The member organisation, which represents the 32 boroughs and the City of London, has spoken out after submitting its joint response with the Mayor of London to the Department for Communities and Local Government’s consultation on 100 percent business rates retention.

“It is of course vital that the Government gets business rates right, but there are major threats to their objective of incentivising growth unless they see this as part of overall package of reforms,” said Cllr Claire Kober OBE, Chair of London Councils.

“As we look to the autumn statement, a potential reset of UK fiscal policy and the fallout from the vote to leave the EU, Government must sit up and listen to the proposals being brought forward by cities such as London, Manchester and Liverpool and those that will shortly be presented by the reconvened London Finance Commission.

“At present, Government’s plans simply do not go far enough in meeting their desire for greater local autonomy. If we are to protect communities and promote growth across the country, now is the time to look closely at how business rates sit in the overall picture.”

As part of its consultation response (pdf) London Councils has called for a business rates system that benefits local government as a whole, not just the capital.

In particular, it has asked that Government brings about fundamental change by decoupling London’s business rates system from the rest of the country. This will stop London’s disproportionately high valuation growth distorting the system outside the capital.

In turn, this will prevent the corresponding depression of tax bases in the rest of the country, allowing councils elsewhere to benefit more from the growth they help deliver.