Localise business rates soon, says deputy mayor

14 Mar 16

London’s deputy mayor for policy and planning has called on ministers to “move as quickly as possible” on the localisation of business rates to local government, which he said would revolutionise the relationship between councils and firms.

Sir Edward Lister, who also acts as chief of staff to the capital’s mayor Boris Johnson, said the devolution plan will be vital to incentivising growth.

“The proposal is that on a given day you switch off all government grant and you give each local authority whatever they get in government grant in business rates, from their share of business rates,” said Lister, who was leader of Wandsworth Council from 1992 to 2011.

“The line is drawn on that day, and every day after that the local authority keeps the growth – and they also keep the loss if they lose business rates.

“I would suggest to you that, overnight, local authorities’ attitudes to businesses will change, because suddenly they are such a core part of their income. We need to get to that point quickly.”

Speaking at the London Infrastructure Summit on 10 March, Lister also said that he anticipated the next mayor of the capital, who will be elected in May, will likely make more use of funding methods such as tax increment financing (TIF) for infrastructure. This allows councils to borrow to fund development, which is then repaid from the increase in rate yield.

“There are a whole range of different mechanisms, TIFs, the community infrastructure levy and other things like that which we’ve learnt over the last eight years how to do. We’ve got one of them under way [the Nine Elms housing and business development project] and three more in the sausage machine, but there will be a lot more.”

Lister’s comments followed concerns voiced by David Finch, leader of Essex County Council, who said ministers must take a “holistic view” of business rate reform to address what he called a real risk that demand for services such as adult social care would outstrip rate growth in the future.

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