Thirty three London boroughs have rejected out-of-hand the government's proposed reform of business rates claiming that the promised benefits are unlikely to be delivered.
The Government is consulting on proposals which it says will simplify the current business rate system and allow councils to keep more of the cash raised locally. Brighton & Hove City Council, which receives more grant from central government than it collects locally, has already decided that the deal on the table isn’t worth having [see earlier story] and many other local authorities are coming to the same conclusion.
The umbrella body London Councils points out that the proposals are as complex as the old formula funding regime, which few people understood, and would make it impossible for councils to predict if business growth will lead to increased revenues.
Jules Pipe, Chairman of London Councils, said: "This was a golden opportunity to encourage growth and job creation. It could also have led to greater financial freedom and responsibility for local government. Both have been lost.
"The Government's proposals do not add any real incentive for councils to promote economic growth beyond the motivation that councils have always had to see their areas succeed, such as the desire to create jobs.”
"The financial gains a local authority can make are so small and time-limited, it is surely questionable whether replacing one complex system of grant funding with another is worthwhile."
The London Borough of Camden has undertaken research showing that the benefits of even major renewal schemes such as King's Cross Central would be "negligible".
The scheme, which includes a revamp of King's Cross station and underground, new office space and housing, is predicted to generate around £4 million of additional business rates revenue. However, according to calculations by Camden Council, the local authority would receive only £1.5 million of that under the government’s plans which would barely pay for the new infrastructure needed to accommodate the project.
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Brighton & Hove City Council