By Dan Drillsma-Milgrom, finance reporter
A report by London BIDs, which represents the 15 existing schemes in London, says the combined burden of a supplementary rate and a BID levy may prove too much for local businesses to bear.
Dr Julie Grail, chief executive of Partnership Solutions, which runs both London BIDs and British BIDs, its nationwide parent organisation, told LGC: 'BIDs typically levy 1p on the rateable value of properties. If you are setting an extra 4p from a supplementary rate then there is no way you will get a BID as well.'
In a BID, businesses can vote to pay a small supplement on their business rates to fund improvements in their local area. Last month, Sir Michael proposed councils be able to levy a higher supplement to pay for bigger transport and infrastructure projects.
The problems arise from his suggestion that in London and two-tier areas, a single rate should be set through agreement between the relevant authorities. This means that while BIDs would continue to be set by shire districts and London boroughs, projects requiring a supplement to the business rate would likely be set at a county or London-wide level.
Despite this, the likelihood that a supplementary rate could be introduced without a vote could make it easier to implement than a BID levy.
Westminster City Council is considering using an enhanced BID to help fund a massive redevelopment of the eastern end of Oxford Street.
Nick Bell, director of resources at Westminster, said a London-wide supplementary business rate to fund Crossrail or the Olympic Games could scupper the plans.
He told LGC this was a real concern. 'The proposals, if implemented, could see the Greater London Authority being responsible for levying and collecting any supplementary rate.
'This would likely result in money contributed by Westminster businesses funding the mayor's priorities, rather than being reinvested in areas such as Oxford Street and the West End.'