By Vivienne Russell | 24 October 2011
Councils in London should be allowed to retain up to 60% of future business rate growth to boost the local and capital-wide economy, according to think-tank proposals published today.
Centre for Cities and Future of London were responding to the government’s consultation on the Local GovernmentResource Review, which ends today. One of the proposals in the review, which was published for consultation in July, is for councils to retain their business rate revenues.
The think-tanks’ report, Capital gains: what does the Local Government Resource Review mean for London, urges the government to take bold action, pointing out that London would fare particularly well.
It says that, over the past decade, many London boroughs have significantly grown their business rate bases and would benefit from the changes. They include Tower Hamlets, with an increase of 103%, Southwark with an increase of 59%, and Camden with an increase of 55%.
It also proposes that boroughs pool a portion of their future business rate income, which could then be used to fund major infrastructure projects, such as Crossrail.
Joanna Averley, interim chief executive at Centre for Cities, said: ‘This is an opportunity to radically alter the finance system to drive growth, but the government needs to ensure that these incentives are strong, simple and long-term to make a difference to London’s economic future.’
Ben Harrison, chief executive of Future of London, added: ‘The Local Government Resource Review will have big implications for boroughs across London.
‘By allowing London boroughs to retain a portion of the growth of future business rates, authorities will have an added incentive to encourage growth in their area, and greater freedom to invest in the local and London-wide funding priorities required to deliver it.’