Deputy Prime Minister, Nick Clegg, has announced that Councils in England will be allowed to keep the business rates they collect rather than paying them into Treasury coffers. Peter Williams, Associate Director in national commercial property consultancy Lambert Smith Hampton’s (LSH) South Coast team, hits back at claims that deprived areas will not lose out from the shift.
“The Coalition’s attempts to hand additional tax raising powers to local authorities through the revised business rates system are ill conceived and, without an equalising mechanism, could lead to vast discrepancies and regional inequalities, which would do no favours for business operators who require certainty going forward.
“At present, Westminster City Council collects over £1bn a year from business rate payers but receives back just £150m under the centrally organised pooling of uniform business liabilities and the temptation would be irresistible for a rich borough like Westminster to retain the greater share of its own collection at the expense of some of the less wealthy areas who, in turn, would seek to recover more through a higher business rate multiple.
“The Government’s policy will only work if there is a redistribution mechanism to ensure that rich boroughs do not simply get richer and the poorer ones become more desperate to recover rates from local business.