BCC: Local Government Finance Bill will incentivise councils to promote local business growth

Dr Adam Marshall
Director of Policy and External Affairs at British Chambers of Commerce
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Post date: Tuesday, 20th December 2011

The Local Government Finance Bill will see new incentives for councils to promote local business growth, while maintaining a single national business rate.

On local retention of business rates

Businesses have long said that they want local councils to treat them as constituents, not just tick-box consultees. The reforms will mean that councils need to ‘think business first’ if they want to raise more money to support local services. Simply put, councils need to grow their business base to increase their income, and that means approving viable planning applications, assisting companies that want to expand, and attracting new investors from home and overseas.

Crucially, no company will pay more to its local council as a result of these reforms, which is absolutely essential at a time when business is doing all it can to keep high streets, city centres and industrial estates vibrant. A single, national business rate will prevent councils from unilaterally raising taxes or undercutting each other.

Firms support the principle of local retention of business rates. Understandably, there are concerns in some areas of England about what the specifics of these proposals mean for individual places. Over the coming weeks, it’s up to the government to deliver the detail.

On the separate business rate rise scheduled for April 2012

These proposals are positive news. Now ministers must look again at the separate issue of scrapping the huge 5.6% rise in business rates scheduled for April 2012. If we all agree that business is good for local communities, a rise of this size and scale must be avoided.

On Tax Increment Financing

Chambers of Commerce have long supported the concept of Tax Increment Financing (TIF), where major local infrastructure is unlocked by using future income to repay an upfront loan. We are pleased that the government has committed to TIF, and to giving key schemes the long-term certainty required to get off the ground and spark local development. Since businesses and councils have waited too long for this power, TIF must be introduced without delay.

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