Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Redistribution must not squeeze out the incentive for growth

  • Comment

In Westminster, we have campaigned long and hard for changes to a business rates system that has been out of date for over a decade, and have worked with councils across London and the UK to make the case for a fairer retention of what we collect. Now our work seems to have finally paid off.

However, has it? Top ups and tariffs will still exist, plus there is little change to the distribution mechanisms. This gives me the sense that with one hand he giveth; with the other he taketh away.

Charlie Parker

Charlie Parker

Our sector must now look to work closely with Government and elected Mayors to ensure that the finances are devolved to the appropriate level to ensure that this radical change truly delivers for the benefit of local authorities and their communities.

The detail is critical, in fact, absolutely critical. We have to ensure that the formulas involved in the distribution of collected business rates will be an incentive for growth, and lead to real benefits across local areas in the UK rather than just a straight forward substitution for the Revenue Support Grant.

The localisation of business rates provides an opportunity to look afresh at how this could fund building the homes needed

Many authorities will no doubt focus in on the news that the central government grant is being taken away from them by 2020, and it will be difficult for some areas to play catch up, I get that and it is a real issue, but we can and must also focus on the opportunities that this decision gives us.

We understand and know that Westminster is in a fortunate position – we are the home to major business and collect £1.8bn of business rates (8% of the national total) – retaining a greater portion of that cash will have huge benefits for our residents and businesses, and also the millions of tourists and visitors that come to the heart of London.

But with that comes responsibility. We wouldn’t want councils elsewhere to fail – so we recognise that a system of tariffs and payments to areas with fewer businesses will be necessary. However, we have to get it right this time. If we are to avoid Local Government being completely devastated by the current fiscal environment, we need to ensure that we are all winners from the change in order that we can better compete with other global cities.

Westminster currently retains just 4p of every pound we collect, imagine how much better we could tackle crime, or provide employment schemes, if we had more money from businesses flowing back into the city from whence it came.

Local distribution in London should not just go to the Mayor, that would create a disconnect with the local place, it needs to go to the boroughs as well and be spent at the same level.

There is also an issue of timing. Local authorities will face almost £10bn of cost pressures by 2020, so can these changes be introduced more quickly to help reduce the possible impact of these pressures? With another general election also arriving in 2020, it could be make or break for the next government as to the health of local government finances. Hopefully the Government will enable the change from RSG to business rates to support greater flexibility and further opportunities for devolution to continue.

And this is where business and enterprise has to tackle the elephant in the room – housing.

Businesses are increasingly telling us that they are losing skilled workers because they can no longer afford to buy a home and bring up a family in London.  The localisation of business rates announcement provides an opportunity to look afresh at how this could fund building the homes the capital and its workers need.

Charlie Parker, chief executive Westminster City Council

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.