By Amanda Vigar, Managing Partner, V&A Bell Brown LLP
While some commentators have accused George Osborne of stealing ideas from the Labour Party, those of us in the know realise that actually, they’ve both just been reading the Battle-Axe’s recommendations! In particular, my call for a major reform of the business rates system.
For a long time, I have been an exponent of locally-raised money being spent locally. Why have two systems of raising taxes when the money goes into the same pot? In fact our multiplicity of intertwined tax streams goes way beyond this – but that’s something for another Battle-Axe barrage!
The Chancellor has announced that local authorities will have the ability to set level of business rates and retain them for spending locally. For me, it’s the first part of this that is the most important because it enables local government to set business rates to attract businesses into their area and, most importantly, to stay there as they grow. There are plenty of reliefs for smaller businesses and wonders such as centrally-determined exemption zones, which have led to some very odd corporate structures to manipulate the system. We’ve seen companies moving from plush establishments in rates free zones to less salubrious premises as soon as full-scale rates kick in. This means revenue is actually being lost!
The change will also mean that where spending decisions are made will be right next to the heart of the business community. So, there should be far more local engagement in what the money should be spent on – if not, then the councillors may rapidly find they lose their seats! With the drive towards the Northern Powerhouse, this move makes sense - otherwise it might turn out to be yet another pointless bit of Government spin. Local businesses remote from London know the challenges of being heard when they’re outside the immediate range of vision of the Mandarins in Whitehall.
I was, however, very disappointed that none of the major parties have seen fit to deem it time for a re-valuation exercise. The property values on which rates are based are now so woefully out of date that they’re not even close to reflecting the way that the country has developed over the last few decades. The saving grace is that the ability to set rates locally means that, although the valuations are outdated, at least the pence per rateable value figures can be adjusted to smooth some of this effect. That said, what if one are of a town is out of sync with another area – e.g. a new prestigious business park against an old run down area of industrial units that are not as easily accessible?
George’s comment: “We will give councils extra power and responsibilities for running their communities” makes it fairly clear that (as ever!) there are likely more than a few devils in the detail. My concern is that the headline grabbing announcements may turn into the proverbial Paper Tiger – much as I fear the whole Northern Powerhouse concept may be doomed to do as well.
I’d also like to take this opportunity to thank everyone who supported and sponsored me as I took on the Last of the Summer Tri, my first ever triathlon. So far I’ve raised in excess of £1,500 with more donations still coming in. It was one of the toughest challenges I’ve ever faced, but I have to say I enjoyed every minute of it. The thought I was raising money for two very important causes, Motor Neurone Disease Association and One Good Turn, was a real motivator and helped drive me on.