Firms support local business rate reform

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Reform to the way business rates are managed is being called for by firms

A groundswell of support for the devolution of powers to set business rates locally by councils up and down the country has been highlighted in new research from the Local Government Association (LGA).

The results of the survey - which was carried out by ComRes on behalf of the LGA - showed more than two-thirds (68 per cent) of UK firms believe local authorities should now have the right to set their local business rates in discussion with companies in their area. Overall, just seven per cent of respondents disagreed.

At present, central government remains responsible for the setting of business rates in all areas and retains half of all business rate income, which is then redistributed to local authorities in the form of grants.

However, under a proposed new system of devolved powers, councils would have a far stronger ability to subsidise those businesses that serve best their local communities, as well as helping more new companies to open and for many small business operators to survive in what remains a challenging fiscal environment.

Across the board, support was seen for these proposals from respondents, with the strongest positive sentiment demonstrated by businesses in the manufacturing (73 per cent) and service (72 per cent) industries.

In particular, firms located in the south-east of England were in favour of the plans (83 per cent), as well as operators in the north-east and Yorkshire & Humber (76 per cent) and in the East Midlands and East Anglia (65 per cent).

LGA chair David Sparks stated: "This polling shows that businesses up and down the country and across different industries have lost faith in the current system of business rates and agree that it should be a local tax set by local areas.

"The current system of business rates is not fit for the 21st century and is preventing councils from supporting small businesses and boosting high streets as much as they would like."

He added that councils and company operators are in agreement that reform to the way business tax is handled at present is required and this must take place with a focus on promoting local growth and helping more businesses to thrive.

Councils could also be doing more to support companies in their area at present if they were able to retain the full amount of business rates they collect, Mr Sparks stated.

Furthermore, if they were given the freedom to set rates themselves, this would allow for greater investment in local infrastructure and a far greater boost to the economy as a whole than under the present constraints of government interference.

This is especially true in the wake of a 40 per cent real-terms reduction in the level of grant funding for authorities up and down the country since 2010.

"Councils and the majority of businesses agree that it is essential that any reform of business rates must make it a truly local tax, which gives them freedom to work together to boost growth and ensure local economies and businesses thrive," Mr Sparks concluded.