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Local government minister Hilary Armstrong has ruled out the return of business rates to full local control for at ...
Local government minister Hilary Armstrong has ruled out the return of business rates to full local control for at least a decade.

In an at times tetchy appearance before the environment select committee this week, Ms Armstrong fought off claims that she had backtracked on earlier commitments to boost local accountability and democracy by increasing the share of revenues councils raise locally.

Challenged by Labour MP Louise Ellman, Ms Armstrong said: 'We have met with a range of people who make up the local government community - including business people - and we could come up with no other form of taxation that gained support.'

Labour's manifesto support for a return to local non-domestic rating had been 'in principle' and included a promise to discuss the issue with business, said Ms Armstrong.

'So business is running it?' asked Labour MP Bill Olner.

'It is a partnership. If local government wins and business loses then local government loses,' Ms Armstrong said.

Asked by Mr Olner whether business rates could return to council control in 10 years if local government and business developed genuine partnership, Ms Armstrong said: 'No - not in the next 10 years.'

Arguing against a return to the old system, she identified problems of redistribution together with a transformed business and property environment.

'Business does not want to go back to that and many local authorities do not want to go back to it,' she said.

Ms Armstrong became momentarily flustered when Ms Ellman challenged her to say how her view sat with that of the Local Government Association.

The minister said initially that in meetings she had attended there had been 'different views' within the association. But challenged for the 'official view', Ms Armstrong said she understood the LGA wanted the full return of business rates in the long term.

The LGA evidence to the committee's inquiry into local government finance called for 'a locally determined business rate' and did not describe this as a long-term goal.

The local government white paper proposed to allow councils to raise a small supplementary rate of 1% of national business rates in year, rising to a maximum of 5% over time. Beacon councils would be allowed to levy double this amount. The supplementary rates would be heavily dependent on consultation with local businesses.

The proposals failed to make the local government Bill, although they are restated in the Department of the Environment, Transport and the Regions' new 'public service agreement' with the Treasury which was due to be announced yesterday.

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