Help cities out by relocalising business rates
Author: Alexandra JonesDate: 04/11/2010
Publication: Local Government Chronicle
It has been a whirlwind fortnight for cities. Two weeks ago, the scale of the challenge facing each city was unveiled in the spending review. Even accompanying freedoms, including removing £7bn of ring-fencing, will be bittersweet. Local leaders will need to make controversial choices about service delivery in order to balance the books.
Last week’s local growth white paper widened the debate on the economy, by focusing on the recovery - although questions remain about whether it’s enough to help cities deliver economic growth, alongside managing cuts. But the biggest surprise of the white paper was that the relocalisation of the business rate is back on the table.
The Centre for Cities welcomes this, having argued for full relocalisation since before the election. The UK is one of the most centralised nations in the developed world. Local government raises 17% of its income from local taxation, compared to the Organisation for Economic Co-operation and Development average of 55%. Giving councils the flexibility to vary and retain the business rate provides a powerful incentive to foster the right local conditions for businesses and jobs.
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