George Osborne outlined plans to fully devolve business rate setting powers to councils by 2020
Britain’s smaller businesses have voiced concerns over the government’s plans to devolve complete business rate responsibility and retention to local authorities following George Osborne’s 2016 Budget speech on 16 March.
Ahead of a communities and local government select committee meeting on 22 March, the Forum of Private Businesses (FPB) has issued a statement sounding a note of caution that mounting pressure on local authority budgets will increase the reliance on business rate income to fund other services, restricting the ability and likelihood that local authorities will provide rate relief or potentially further reduce rates.
FPB CEO Ian Cass said in a statement: FPB members have some concerns that we hope will be taken into account. The potential for a variety of approaches applied by different local authorities and mayors could build further inequality into the system and may disproportionally affect those areas with less ability to generate business rate income.
Cass urged MPs to consider the needs of small business. He encouraged the committee to ensure suitable caps and controls on business rates were put in place to protect small firms, and called for greater clarity and transparency around the business rate-setting process.
Above all, Cass urged ministers to guarantee that small businesses would be included and would have a voice in the decision-making process on how business rates are set.
As part of what Osborne referred to as the biggest transfer of power to our local government in living memory? in last week’s Budget speech, local authorities across the UK will be able to retain the 26bn a year raised via business rates.
Measures to extend business rate relief to smaller firms will take 7bn out of the total business rate take, Osborne also revealed.
Full devolution of business rates to councils is set to be completed by 2020, with the move accompanied by the phasing out of Westminster’s main grant for councils and the devolution of additional spending powers.
Missed George Osborne’s eighth Budget speech? Read Business Advice’s brief summary revealing the key measures for small business.
