LYONS REVIEW: RETAILERS RELIEVED OVER LOCAL BUSINESS RATE CONTROL

21 March 2007

But fear new business levy

The British Retail Consortium (BRC) is pleased the Lyons Review does not recommend a return to local control of business rates but is concerned at plans to allow extra local levies on businesses. 

The BRC has long urged the Government to reject a return to locally-set business rates saying that would leave retailers as voteless cash-cows, which local authorities could arbitrarily plunder to cover budget deficits.

The final report of the Lyons Review into the future funding of local government was published this morning (Wednesday). It recommends retaining the centrally controlled Uniform Business Rate. It also includes recommendations to allow local authorities more autonomy in deciding how they deliver services and giving new powers to impose local supplementary business levies.

BRC Director General Kevin Hawkins said: “Local authorities are in the best position to respond to the needs of local people. Giving them more flexibility in how they maintain roads, remove refuse and clean community areas can be positive, but autonomy should not be extended to setting business rates.

“The localised business rate system was scrapped in 1990 because it wasn’t economically efficient or locally accountable. It created huge inconsistencies in rates and left businesses open to opportunistic and unpredictable rate hikes. We are pleased this review does not support a return to those bad old days. This would be wrong now and wrong in the future.”  

The supplementary business levy, proposed in the Lyons review, would be administered by local authorities to fund transport or other infrastructure projects. The BRC is concerned how this would be applied in practice.

Retailers fear local authorities would use the levy to fund projects they should be delivering from their existing budgets.

A locally controlled levy could also damage the future development of Business Improvement Districts (BIDs). Retailers would be reluctant to make voluntary contributions to them if they could be forced to pay unpredictable and unaccountable supplementary levies on top.

BRC Director General Kevin Hawkins continued: “We are concerned by how a supplementary business levy would be applied and will closely examine the detail of the proposal. Retailers already make a massive contribution to local authorities through business rates. They expect local authorities to meet their obligations from that but there is a real danger this could result in yet more tax demands to pay for projects that should be coming from existing budgets.

“Businesses should not be expected to fork out extra cash for projects unless they are genuinely additional and the economic benefits can be clearly demonstrated.”