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Reformed business rates can work for councils and commerce said the Local Government Association today calling for ...
Reformed business rates can work for councils and commerce said the Local Government Association today calling for a new dialogue with the business community.

Working with business to enhance local prosperity - the latest in a series of discussion papers published by the LGA on the reform of local government finance, argues that localising business rates could be good news for everyone - with real benefits for local businesses, local government and council tax payers.

LGA chairman Sandy Bruce Lockhart said: 'The LGA believes that localising business rates - far from being bad news for commerce, could be the key to unlocking exciting new potential in our local communities - for the benefit of all.

'As the CBI itself has said, local councils and local businesses both provide services that are important to each other's success and that of their local area. But our currently centralised system for funding local government undermines the incentive to develop this important relationship, by preventing local flexibility and stifling local creativity.

'Under our plans councils could work in a much more meaningful way with local businesses through a partnership arrangement - a new governance model which would establish a framework for more appropriate rates to be set based on local needs, while safeguarding business interests for mutual benefit.

'At the moment, business rate income generated by local businesses goes to the Treasury and then back to local government with national restrictions attached to it. It would be much better if local rates simply went to local councils and this would help build strong public private partnerships to strengthen the local economy.

'Crucially our initial discussions with some local chambers of commerce indicate that business leaders do see the potential benefits in reform and are keen to work with us to explore how it might operate in practice.

'Building on good practice examples - such as LABGI (Local Authority Business Growth Incentives) we want to develop these approaches in close consultation with business sector partners to help reassure them that there will be appropriate safeguards to protect their interests. Several more local meetings are planned to take this forward', Sir Sandy said.

The LGA's paper on reforming business rates, working with business, is released today alongside the final two publications in its series on the combination option - the association's proposals for reversing the current 75:25 central-local funding ratio, through a combination of local income sources.

Funding local government through income tax, explores how local government could be funded through transferring a proportion of national income tax to fund local government directly, either initially as an assigned revenue, developing into local income tax, or moving straight to a local income tax. Implementing the combination option outlines how the combination option might work in practice and what it would meanfor councils and their local taxpayers. Other options in the LGA's 'combination option' approach include a more reformed and equitable property tax and a basket of smaller taxes and charges.


1) Information on the balance of funding, including detailed papers on implementing the combination option can be found at

2) The LGA recently met with council and business leaders in Manchester and is scheduled to meet other leaders in Birmingham and Norfolk in coming weeks. The association has also contacted a number of other core cities with the view to meet to discuss its ideas.

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