October 09, 2015
George Osborne's proposal to allow local authorities to set, collect and spend revenue from business rates has been welcomed by the Institute of Directors.
Research by the IoD has found that more than 60% of its members back the plan to give local politicians the power to set business rates.
Simon Walker, IoD director general, said: "Businesses are excited about the prospects for devolution, and the promise to devolve business rates will give local authorities a greater stake in the success of their local economy. Businesses have been clear that they want enterprise to be put at the heart of the devolution agenda, and the Chancellor appears to be doing just that."
However, the IoD's survey of members also found that more than half were concerned that devolution would lead to higher taxes.
"Councils must avoid the temptation to increase rates to raise revenues, and instead compete to attract businesses to the area, which will bring jobs and wealth," said Walker. "We hope this new deal will pave the way for councils to use these new powers to attract businesses and regenerate high streets. While businesses support devolution, they will not stand for local politicians using it as an excuse to hike taxes."
Councillor Gary Porter, chairman of the Local Government Association (LGA), said the announcement is "great news" for councils and shows that "the Government has listened to the arguments set out by local government".
The LGA, in common with many business organisations, has been calling for an overhaul of the business rates system. Until now, Porter said, councils have been "hugely restricted" in their ability to introduce local discounts with Government setting the charge and keeping half the income.
"With greater local control, councils will have flexibility to reduce business rates for the types of shops and businesses that residents want in their high streets and neighbourhoods. It is right that all of the money which a business pays is retained by local government and this will be a vital boost to investment in infrastructure and public services."
Porter also urged the Government to reform the rates appeals process. "Councils currently have to fund half of all business rates refunds but, by 2020, they will be liable for 100% under this new system. This makes reform of the appeals system even more urgent to protect councils from the growing and costly risk of appeals and ensure businesses are happy with what they pay."