CROSSRAIL FUNDING SETS “WORRYING PRECEDENT”

Retailers fear that local authorities across the country will see today’s Crossrail announcement as a green light to pick the pockets of private enterprise.

Prime Minister Gordon Brown today (Friday) announced that as part of the funding arrangements for Crossrail retailers in the Capital will be obliged to pay hundreds of millions of pounds in extra tax. That is over and above the annual £4.5bn contribution the retail sector already makes to the Exchequer in business rates alone.

The British Retail Consortium (BRC) believes today’s decision sets a worrying precedent and will prompt local authorities outside the Capital to explore ways to introduce similar schemes to fund their own public projects through additional taxation.

The Crossrail funding model is ill-conceived and inequitable. Despite plans for Crossrail being on the table for nearly 20 years successive governments have failed to come up with a funding mechanism that clearly identifies the beneficiaries of Crossrail in order to determine a fair contribution. As a result retailers in the capital will contribute much more to the project than other sectors whose benefits will be far greater. Local authorities in other areas must not be permitted to take the same ill-considered approach.

The BRC opposes the use of supplementary levies to fund projects which should be funded through existing tax revenues and believes it would be a disaster if local authorities were given similar freedom to impose additional taxes on businesses, with a total lack of accountability. 

BRC Director General Kevin Hawkins said:

"Crossrail is a much needed and long overdue project but this funding model is both ill-considered and completely inequitable. Proportionally retailers will end up contributing far more than they can ever hope to get back. Effectively they will subsidise the biggest beneficiaries, one of which will be government. If a similar model were applied to projects outside the Capital the outcome for retailers would be dire.

"Today’s decision sets an extremely worrying precedent. Even in London, where City institutions will share some of the burden of the extra tax, retailers have still ended up getting the rough end of the deal.

"In regional centres, where extra capital investment from financial institutions cannot be guaranteed, the cost of funding projects in a similar way would fall almost entirely on the shoulders of retailers.

"That is totally unacceptable. The retail industry contributes more than £4.5bn every year in business rates alone. They are entitled to see public projects funded from the public purse to which they contribute so significantly. "