Local councils react to surprise business rate announcement » SMEInsider

Local councils react to surprise business rate announcement

Budget sheet with glasses and calculator

Local authorities in Kent have given a cautious welcome to the government’s plans allowing all councils in England to keep 100 per cent of their business rates. How will this change affect small businesses?


More power to local councils

During the Conservative’s annual party conference in Manchester this week, chancellor George Osborne made a surprise announcement, stating that all councils can hold on to £26bn worth of business rates, calling it the ‘‘biggest transfer of power’’ in recent history.

Before the rule change, local councils would split the rates 50-50 between them and Westminster.

Councils have also been given the option to either raise or lower the rates, with small businesses currently paying a standard business rate set by the government.

Osborne added that the changes, which are set to be in place by 2020, will stop local council leaders asking central government for more money.

Biggest reform in local government for a very long time’

The announcement has been met with mixed reactions, with the Local Government Association (LGA) approving the changes.

‘‘The LGA has long-argued that the current system of business rates needed reform so councils could effectively support small businesses and boost high streets,’’ explained Cllr Gary Porter, chairman of the LGA.

‘‘Councils and businesses both agree that business rates should be a local tax set by local areas. It is right that all of the money which a business pays is retained by local government and this will be a vital boost to investment in infrastructure and public services.’’

Cllr Peter Fleming, leader of Sevenoaks District Council shared the LGA’s feelings, admitting that the announcement came as a ‘‘massive surprise.’’

‘‘Frankly, if this is the case, it is the biggest reform in local government for a very long time. It represents the biggest transfer of power to local government for a very long time. What we put in and get back is not the same.’’

However not everyone in local government shares the same opinion regarding the business rate change. Cllr John Simmonds of Kent County Council showed a higher level of caution compared to other councillors.

‘‘It will be interesting to see how they roll this out. It will give us some welcome freedom but we have been let down before,’’ explained Simmonds.

John Allen, national chairman for the Federation of Small Businesses (FSB), sees the announcement as an opportunity for SMEs and local councils to work together.

‘‘The surprise announcement to allow councils to retain Business Rates presents a huge opportunity for local authorities and business to work together to boost local growth, develop a fairer tax system and create the jobs of the future,’’ said Allen.

‘‘We also know there will be challenges to get the new system right. We want to ensure businesses don’t get short-changed. It is essential the new rates structure works for all our 5.2 million small firms.’’