Business cannot be a ‘cash cow’

This is best achieved where business is treated as an equal partner, not a cash cow. The business community relates to local authorities as both consumer and supplier of services and partner in projects and schemes.

But the government’s proposals to allow local authorities to levy supplementary rates bills on business are flawed, as well as likely to prove unworkable in practice.

The proposals in the Local Government Finance Green Paper would give local authorities the power to levy annual supplements to the national business rate of one per cent a year for five years. The BCC has estimated this supplementary proposal could cost businesses in England an additional £2.7bn in the next five years, and £1bn each year thereafter.

The BCC believes local authorities should first win approval for their plans from the business community and only then be allowed to levy a supplementary rate. As the proposals stand, local authorities can decide to levy a rate, then seek agreement on how it should be spent. Should no agreement be reached, the extra revenues raised will enter the existing national business rate pool, over which business has no influence.

These draft proposals are yet another tax on business. The provision for business consultation is inadequate, with the danger that once again business picks up the bill for poorly controlled spending. Not only are these proposals likely to undermine the working relationships that have developed between local authorities and their business communities, but they could also threaten local economic competitiveness.

The BCC supports the principle of Business Improvement Districts (BIDS), where specific projects are agreed upon with the local business community before extra funds are raised, and where a clear cut-off date for the local levy is set.

The BCC believes BIDs could be extended as a justifiable and clearly accountable alternative to government’s current proposals for a new supplementary rate.

– Dr Ian Peters is deputy director general of the BCC

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