Business rates retention branded unfair by pilot scheme leaders

Stuart Hicks, Manchester Office, Director - Dunlop Heywoodby Stuart Hicks, Director.

As if the Government hasn’t enough to worry about at the moment with oscillating polls over Brexit, it seems the Chancellor’s flagship policy of devolving business rates to local authorities is under fire.

Council leaders who are piloting the government’s scheme to fully devolve business rates have apparently labelled it “unfair” at a recent Communities and Local Government (CLG) Committee hearing.

Political heavyweights Joe Anderson, Mayor of Liverpool; Richard Paver, treasurer of the Greater Manchester Combined Authority, and Sharon Gregory, group accountant with LGSS finance – a public venture owned by Cambridgeshire and Northamptonshire county councils – have come out and said that problems with the reforms included inequality, difficulty calculating how much tax should be paid and the forthcoming business rates cuts.

Anderson added that the 100% business rates retention would lose £52m for Liverpool alone.

Council leaders have previously warned the CLG committee that not enough is known about the proposals and that they could leave councils with a lower business rates threshold worse off. Paver also said that the government needed to release funds to ensure that northern and southern towns had an equal starting point. However, he said the fact that both Manchester and it’s somewhat poorer neighbour of Rochdale had experienced business rates growth in 2015 was a sign that the scheme could work.

The leaders also expressed concerns about the business rates cuts announced in last month’s Budget without any involvement or discussion, especially with those engaging in the pilot; which is a point worth making but at least it shows the pilot schemes are doing exactly what they are designed to do – ferment debate and see where the weakest or unfair links are before any national roll out.

By speaking out now – for example to highlight the difficulties in establishing a measurement base to calculate how much tax should be paid – we should take this as a positive so the final scheme can be revised and made fit for purpose come 2020.

Paver gave a good example of some of the complexities facing each Local Authority.

For example, the rating list of his city council is about 24,000 hereditaments, which range from £30m+ at one end for the airport as a single hereditament to a low as £500 or £1,000 at the bottom end for a car parking space elsewhere. Trying to understand the numbers, the flows of money and the way the Valuation Office works has been a real problem for them but they are making progress.

There are undoubtedly lessons to be learnt from these pilots but surely that is the whole point?