The announcement by the Coalition Government to re-localise business rates – well at least to allow councils to retain the business rates from new commercial development – will be welcomed by the local government fraternity.
It should also be welcomed by the development world. There will now be a financial incentive for councils to approve commercial development, in the same way as the New Homes Bonus incentivises new house building. And by preventing councils from increasing the business levy, there is a reassurance that there will be no return to the 1980s when socialist town halls piled up the tax burden onto the business owner.
But it is a bold and brave decision by the Coalition, particularly the Liberal Democrats. The major beneficiaries will be those areas that attract new businesses, predominantly the more affluent south.
The London Borough of Westminster collects 6% of the country’s entire business rates. Every time a new Gherkin or Shard goes up, they will be cashing in.
A new political narrative is emerging that we have a Tory government, propped up by the Liberal Democrats, which is favouring the south over the north. The Liberal Democrats paid a massive price for this at the recent local elections, suffering huge losses in the northern cities.
Despite Nick Clegg’s assertion that the localisation of the business rates will be fair, it is difficult to see how any system can be implemented which won’t favour those areas which are already attractive for business to locate.
What are your thoughts? Do you think re-localisation will give councils more incentive to support commercial development? Which areas will be the main beneficiaries?