Councils have a strong interest in seeing a reformed business rates system that commands confidence across the public and private sectors. In particular, it is crucial that the business rates system is responsive to local needs, fair, buoyant and incentivises local growth.
Key messages
The business rates system
- Alongside Council Tax, business rates represent the largest source of income for councils. It is crucial that the business rates system is responsive to local needs, fair, buoyant and incentivises local growth.
- The review of business rates should reward councils for growing their local economies, whilst protecting those areas less able to generate business rates income.
- The Government needs to empower councils to better plan their finances. Clarifying the future of business rates retention and the Fair Funding Review will go some way to achieving this ahead of the 2019 Spending Review.
- It is important that a solution is reached to help deal with the financial risk from business rates appeals, as the need to make provision for these is currently having a major impact on councils’ finances. We would welcome proposals that provision should be made for this centrally.
- We would also like to work with the Government on the other issues relating to the business rates base. This should include:
- Modernising the way business rates affect different ratepayers, to ensure that sectors such as online businesses make a fair contribution and that councils are given maximum flexibility on reliefs.
- Considering the impact of business rates on councils with a small number of large ratepayers in an area.
- Reinforcing the stability of the tax.
- Tackling the issue of business rates avoidance. Our estimates suggest that at least £230 million is lost each year due to business rates avoidance.
- Reviewing the process for appeals and clearing the backlog.