Posted: 07/10/2015

Osborne’s business rates proposal sparks calls for more detail


George Osborne
Chancellor George Osborne unveiled proposals to allow local authorities to keep 100% of the proceeds from business rates

Small businesses are demanding more details on the government’s long term proposals on business rates, after the Chancellor announced a change that will see local authorities keep rates collected in their areas.

Revealed by George Osborne at the Conservative party conference this week, the new system will see local authorities retain 100% of the money raised through business rates, rather than surrender half to a central government pot.

The Association of Convenience Stores (ACS), which supports thousands of independent retailers, said it was unclear whether this measure would sit alongside the governments’ review of the rating system, which was due to be published in the 2016 budget, or this would replace it.

Currently around £9.4bn of the rates collected by central government is redistributed by Whitehall in grants to benefit areas that have a smaller proportion of businesses, but Osborne argued that the shift of power away from the centre would help councils to attract more businesses and more money and thereby boost regeneration on the high street.

Under the plans, councils will be able to cut rates to attract new investment and jobs, but larger cities with elected mayors, including London, Greater Manchester, Leicester, and Sheffield, can add a premium to pay for major infrastructure projects.

However retailers fear the change may result in higher rates bills, with councils using it as an opportunity to get businesses to foot the bill for investment.

“Everyone is in the lurch at the moment,” said head of communications and research Chris Noice. “It is very difficult to predict what is going to happen as we didn’t see this coming.”

The ACS said it was urgent that businesses see more details of the chancellor’s plans. “We need reassurance that local shops and other businesses will not see higher rates bills as a result of this policy,” it said.

Independent delis and food stores are backing calls to make the current system more transparent, flexible and conducive to small business growth. Key aims are linking the value of rents linked more closely to inflation, introducing more frequent valuations, and a more tiered system where the smallest properties wouldn’t pay business rates while others pay a flat rate charge. It also wants investment to be rewarded by letting businesses offset capital investments against rates bill.

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