TaxPersonal TaxBlair backs down on local business rates

Blair backs down on local business rates

Tony Blair has announced the government is to drop plans allowing local authorities to levy an extra business rate that could have cost up to £1bn a year.

Speaking at a conference on quality of life at the local level today, the prime minister said: ‘When a neighbourhood declines, local business suffers too. Businesses, like individuals, have a major stake and role to play in improving local areas.’

The Department of the Environment, Transport and the Regions had originally proposed to let councils levy uniform local taxes equivalent to up to five per cent of the national business rate.

Instead, Blair announced councils would be able to set up small business improvement districts, giving businesses the chance to decide whether local taxation was justified.

The U-turn will mean local taxation would be limited to specific economic regeneration projects within the improvement districts, allowing businesses a veto over such plans.

Welcoming the announcement, local government minister Hilary Armstrong, said: ‘Business Improvement Districts will enable councils and businesses to agree local projects and the funding needed to deliver them. Objectives of BID projects and how to achieve them will be determined locally.’

Karl Eddy, a consultant in KPMG’s economic and projects group, believed the proposal was good news, saying: ‘It has to be a very positive move, but will depend on its implementation.

‘Local authorities can’t be allowed to abdicate their responsibilities and it will demand a close dialogue between the councils and business.’

The Confederation of British Industry, which has campaigned hard to have the plans dropped, welcomed the decision.

John Cridland, CBI deputy director-general, said: ‘I am pleased that the government is looking at more constructive ways of improving working relationships between local government and firms.’

But Cridland was cautious about the Business Improvement Districts.

‘Any projects need to be genuinely additional to activities already being undertaken by local authorities and should demonstrate tangible benefits to both business and the community,’ he said.

‘This is the key to persuading business to participate,’ he added.

Links

CBI chief warns of £750m rates bomb

Business rate ‘top up’ may be scrapped

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