Major shake-up of business rates ‘urgently needed’

Michael Brown, cabinet member for finance and Louise Goldsmith, leader of West Sussex County Council

Michael Brown, cabinet member for finance and Louise Goldsmith, leader of West Sussex County Council

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A major shake-up of the business rates system is ‘urgently needed’ according to West Sussex County Council.

The Government is currently reviewing whether it is fit for purpose and how the system could better support small and medium sized businesses.

The county council’s response argues that local authorities should be given full control over the rates, including the power to set the level of charges each year, as well as retaining the majority of the proceeds.

Michael Brown (Con, Fernhurst), WSCC’s cabinet member for finance, said: “Our response to the review has argued that the Government should give full localisation and control over business rates – so local authorities set the rates and charges each year as well as the system of discounts and reliefs.

“It would mean we can respond promptly to the needs of our local business sector, helping them to expand and grow our local businesses.

“We now need to expand the role of local authorities. This isn’t about ramping up the charge levied on our businesses – that wouldn’t help them or generate more income to the council over the long term.

“It’s about working in partnership to encourage business and ensure the rates are fair and with local discounts given where it can help, not driven by nationally set rules and increases.

“The council can listen and respond to the need of local business, in turn helping them create new jobs. The council then benefits from supporting a growing economy via the extra overall business rates that come over the longer term.”

The county council’s response says the review is ‘urgently needed’ and calls on the Government to consider increasing the funding share local authorities receive from business rates, ideally to 100 per cent.

Currently 50 per cent goes to central Government, 40 per cent to district and borough councils, and ten per cent to county councils.

It reads: “West Sussex County Council fully supports the Conservative Government’s view on localism and endorses an agenda to devolve more powers and responsibility to a local level.

“Localisation of business rates would be good for business, as local councils are best placed to understand their needs. In turn, this will enhance productivity within the economy, as local authorities will be highly incentivised to ensure business grows to strengthen their own income stream.”

The response continues: “The county council has a crucial role to play in contributing to the prospects for growth in the local economy, by for example the link to investing in education, skills and adult education, via supporting transport infrastructure or strategic planning.

“As a local authority, a county council also has the advantage over Government of knowing its local area and is therefore better placed to judge local need and is more responsive to the particular demands of business within its boundary.”

Louise Goldsmith (Con, Chichester West), leader of WSCC who has responsibility for the economy, added: “If the Government would take our views on board and localise business rates, it would lead to a real strengthening of ambition and entrepreneurialism among local authorities as they look to their own abilities to encourage economic growth and away from central Government providing funding.

“In West Sussex we have an excellent track record of supporting business, via infrastructure improvements such as our £50 million ‘kick start’ programme which worked to boost the economy, and with grant programmes aimed at supporting smaller scale businesses and social enterprises.”

The response concludes: “As seen with Manchester, which Government is encouraging to be a northern economic powerhouse, now is the time to be bold with a localism that enhances the capacity and influence of local authorities.

“Pressure has built up from business itself to review the current system in part because of the inflexibility of the national arrangements.”

The Government has said the review will report its findings by the Budget in 2016.

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