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Show me the money

Show me the money

🕔01.Jul 2011

Nick Clegg’s confirmation that councils will be able to retain the business rates they collect is perhaps the most important piece of the Government’s growing localism agenda.

It wasn’t a new announcement, sure, but as the Centre for Cities points out, the policy will do much to incentivise local authorities to attract, nurture and retain businesses that can bring with them sustainable income streams via their rates bills as well as jobs for citizens.

As CfC says:

Currently, English city councils get no direct financial benefit from supporting new development. There’s evidence to suggest that this has constrained their expansion, restricted the supply of offices and factories, and ultimately driven up the cost of the premises for business. This has been detrimental for economic growth.

As well as the economic benefits, the policy provides businesses with a strong incentive to engage with local authorities via relationships that are much more constructive than some that exist at the moment. Businesses will want to ensure there is ‘no taxation without representation’, and work with councils to develop the right policies to attract more inward investment.

The Centre for Cities will soon publish proposals on how policies to relocalise business rates are developed, but for a starter for ten, here are some early thoughts from Chamberlain on how this change could be framed:

  • Local Enterprise Partnerships should be given a veto over business rate increases above a certain threshold, and should be give a statutory power to designate and direct the spending of a specific proportion of the business rate take
  • Investment funds primed by a precept on business rates could be created to support startups or early stage businesses
  • Business rates should be variable according to industry sectors and other factors, such as scale or the environmental impact of a business
  • Business rate discounts should be used to incentivise businesses who demonstrate community engagement through schools programmes, skills development, environmental programmes or direct job creation.
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