Business leaders have welcomed the chancellor’s offer to allow councils to keep hold of all business rates income while warning the reform risks leaving some councils struggling.
In a statement released following George Osborne’s announcement today, the Confederation of British Industry described the idea as “bold” but warned against any move to push up businesses’ bills.
“If this bold announcement on business rates is a way to cut them, then it will spur councils to take a pro-growth approach, and has the CBI’s support,” said the CBI’s director general John Cridland.
“But this must not be a way to increase rates without the consent of the local business community.”
The British Property Federation, which represents property investors in the UK, also welcomed the “bold” move to reform the business rates regime which it said had “myriad problems” and was in need of “radical” change.
BPF chief executive Melanie Leech warned, however, that the radical reform should include measures to protect councils with relatively low levels of business rate income.
“The business rates system as it stands has myriad problems and needs dramatic reform, and we would not want this move to exacerbate those issues,” she added.
“The fact that some local authorities have a much higher tax intake than others could lead to rate distortion across the country and have knock-on effects on growth, leaving some local authorities struggling to keep up.
“It will be imperative for the Treasury to engage with industry to ensure that this does not lead to a proliferation of different rates of tax across the country, which businesses will find difficult to negotiate and which could lead to uneven growth across the country.”
As revealed by an LGC investigation this summer, the kind of financial independence envisaged by the chancellor’s reform will benefit some authorities far more than others.