22 September 2006
Sir Michael Lyons has insisted that he has not ruled out relocalising the business rate – but admitted that it was not the answer to the problem of local government funding.
Lyons, whose local government inquiry is due to report this year, dismissed reports that he had already made up his mind to exclude relocalisation from his recommendations.
'The simple proposition that you return the business rate [to local control] isn't a golden key,' he said. 'The business community completely agrees that we need to invest more in infrastructure but you cannot find resources for that investment solely from a business tax.'
Lyons said he would continue to consider the introduction of charges for certain services but said he was not spending his time dreaming up new taxes. 'My interest is in how we create a flourishing, prosperous country,' he said.
'If you believe that local government makes an important contribution, the single most important change you can make is… about increasing local flexibility.
'Nobody has challenged that and it continues to be at the heart of my thinking.'
Lyons was speaking ahead of a conference he hosted on September 14 on local government's contribution to economic prosperity.
The conference also heard from Communities and Local Government Secretary Ruth Kelly and Treasury minister John Healey, who announced an expansion of the Local Authority Business Growth Incentive scheme to help councils promote local enterprises.
Changes being introduced for the second year of the scheme remove ceilings on the level of payments that can be made. Councils will also be able to decide how they use their additional money.
Last year, more than 270 authorities received a share of £126m to help them promote business locally.
'We want to encourage local authorities to do more to boost jobs, growth and enterprise in their area,' Healey said.
Kelly added that local government's contribution to economic performance had not always been well defined, and suggested the forthcoming white paper would help clarify the relationship.
She stressed that Whitehall was keen to listen to towns and cities. Kelly told delegates. 'I want to introduce a flexible framework that allows different places to move at different paces.'
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