Government claims that new proposals to hand local authorities more power over business rates represent a huge transfer of power have been dismissed as “deliberately misleading”.
Chancellor George Osborne this week announced a trio of proposals to allow local authorities to keep a greater proportion of business rates, lower their rates to attract more businesses, and increase rates to pay for infrastructure.
Speaking at the Conservative Party conference in Manchester, Osborne said the proposals amounted to the “biggest transfer of power to our local government in living memory”.
But experts have poured water on the claim, pointing out that the retention relates only to growth in rates, that the 2011 Localism Act already gives councils the power to offer relief, which few authorities have exercised, and that the 1980s cap on rate increases will be retained, with only combined authorities allowed to increase them for infrastructure spending and only by 2p in the pound.
Gerald Eve partner and head of business rates Jerry Schurder said: “[Osborne] is being misleading – and deliberately so – in giving the impression of a change more fundamental than it is going to be.”
The British Property Federation has also warned that the policy could have a distorting effect, with some areas collecting and retaining much more than others.
BPF chief executive Melanie Leech said: “The fact that some local authorities have a much higher tax intake than others could lead to rate distortion and have knock-on effect on growth, leaving some local authorities struggling to keep up.”
