CIPFA calls for local control of business rates

The public sector accountants? body argued for the change in evidence to the Commons environment sub-committee on Monday 14 December.

The CIPFA proposals followed warnings to MPs that past capping and a high reliance on central funding damaged local democratic accountability – particularly that the inherent gearing factor meant 1% of expenditure above Standard Spending Assessment required a council tax increase of around 4%.

CIPFA council member Tony Redmond, Harrow chief executive and finance director, told the committee locally fixed business rates would be good for business – as well as local democracy. He said: `I think the business community would benefit by having greater involvement beyond the present low key input because the business rate is determined nationally.’

The institute said it would not only give local authorities greater autonomy but re-establish effective links between business communities and the community leadership.

The Audit Commission, insisting on neutrality, told the committee removing universal capping would increase local authorities’ accountability. It said there should be a far reaching review of charging, income and local revenue raising – including whether non-domestic rate should be returned to local authority control.

The commission’s director of local government studies Bob Chilton said: ‘If it (business rate) were returned, the gearing factor would be reduced and the local input increased.’

The government later stressed their commitment to a more limited return of control over business rate – a power to vary the national rate up or down by up to 1% of the national rate in a year, subject to an overall ceiling of 5%.

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