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Minister places 'trust' in businesses on rates reform increases

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The government will not impose any more rules on the governance of local enterprise partnerships in response to new powers for local areas to increase business rates, a local government minister has indicated.

At the Local Enterprise Partnership Network’s summit in London, concerns were raised that business leaders sitting on a LEP board could have a disproportionate influence over any proposed increases in business rates under the reformed system announced by the chancellor earlier this month.

George Osborne said combined authorities with directly elected mayors would be able to increase business rates, albeit within a cap, as long as the rise had the support of local businesses.

Precisely how places will have to consult businesses has not been explained. One audience member at the summit raised concerns about whether those appointed on to LEPs could vote in their own interests and not those of the wider business community.

As LEPs are non-statutory bodies, there is discretion in how the membership of the body is composed. The only rules are that each LEP must be chaired by a business person and at least half of the members must be from the private sector.

In response, Baroness Susan Williams of Trafford, the Department for Communities & Local Government’s representative in the Lords, said: “We have got to trust local areas to both appoint the appropriate people through a proper appointment process and to deliver without any whiff of vested interests at play.”

Greater Lincolnshire LEP’s chair Ursula Lidbetter said she hoped the government would look at the model used by Business Improvement Districts (BIDs).

BIDs are business-led partnerships in which a levy is charged on all of the businesses in a defined area, in addition to the business rates bill. The levy is then used to develop projects which are aimed at benefitting the local economy. All of the levied businesses then get to vote on whether they go ahead.

Ms Lidbetter said there was an assumption that businesses “don’t want to pay more” but added she thought they would “if you put something on the table that will grow our businesses and economy”.

Chris Richards, head of English devolution policy at the manufacturers’ organisation EEF, agreed. He said: “If there’s going to be some investment, at the end of the day [businesses] are more than happy to pay some kind of additional levy.”

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