Businesses in England breathed a huge sigh of relief yesterday following the outcome of the first phase of the Government’s Local Government Resource Review according to Jerry Schurder, head of rating at leading business rates specialist Gerald Eve.
Schurder explained: “Whilst the Minister, Eric Pickles, in his Statement to the House yesterday said he was ‘determined to repatriate the business rate’ in truth the proposals fall way short of the return of business rates to local authority control. Instead, as campaigned for by business and its representative bodies, the Uniform Business Rate is to remain at a standard national level and councils will not be given any powers to set their own rates charges. They will, however, be able retain a proportion of the growth in rates created by new property development whereas presently any additional rates are passed to central government.”
Gerald Eve planning and development partner Virginia Blackman added: “These proposals offer opportunities for pro-active local councils to prioritise investment into areas which benefit the local business community and encourage enterprise and growth. Local authorities who understand the needs of their area will have the flexibility to choose to invest in infrastructure and services to create an environment which assists new businesses and development.”
The review’s recommendations are designed to incentivise local authorities to promote growth and to reward them for achieving it. Schurder welcomed the proposals and commented: “Whilst on their own these proposals will not necessarily lead to new development schemes, especially in current economic circumstances, they should encourage councils to become more ‘business-friendly’. The Localism Bill proceeding through Parliament allows authorities to grant discounts from rates bills so long as these are funded by the council. These are far more likely to be offered once Councils are assured that they will be permitted to retain the additional rates revenues from new development. This combination could provide a powerful regeneration tool outside of the proposed new Enterprise Zones with Councils able to attract new business by the promise of discounted rates bills.”
The Government yesterday issued a Consultation Paper which is to be followed in August by eight technical papers addressing a huge range of issues on which comments are invited. Schurder said: “The Resource Review’s recommendations carry an air of inherent simplicity about them and are difficult to fault at a high level, but the current system of local government finance is fraught with complexity and it will be nigh impossible for the requisite calculations of local growth to be sufficiently transparent for the review’s aims to be deliverable with equal simplicity. There is an in-built conflict between our national rating system which is to be retained together with its five yearly revaluations, and the proposals for local retention of rates where the period of retained growth will span revaluations. This is certainly a case where the devil will be in the detail.”