Business Rates: Will Osborne Empower Local Authorities?

Business Rates: Will Osborne Empower Local Authorities?

It was meant as a bold devolutionary statement. On the second day of this year’s Conservative Party conference in Manchester, George Osborne announced a major change in in business rates administration.

Osborne stated that the intention was in the future for local councils to receive the full revenue from local business rates in exchange for taking on additional responsibilities around their administration.

Essentially, all local authorities will keep the revenue from the business rates they levy and will have the power to cut these rates if they feel that this will attract new business to their areas. Those authorities opting to have an elected mayor will get the additional power to increase business rates as they see fit.

Paul Giness of The Beattie Partnership has a mixed response to the Chancellor’s announcement. “At this stage it raises more questions than it provides answers. Will councils with higher rateable values benefit more than those with lower rateable values? Given the constraints arising from austerity measures, to what extent will local authorities actually be able to cut rates?”

The announcement has the potential to exacerbate tensions between local and central government because of these ambiguities. In practice, will it shift responsibility on to councils without them having the practical option to make effective changes, due to budget cuts?

A further potential “central versus local” tension may come from the actual setting of rateable values. The work for the 2017 revaluation is already underway and if Osborne’s changes are not due until 2020, does this provide some clues on the duration of the forthcoming 2017 revaluation perhaps only lasting for three years?

“At this stage, the Chancellor’s plans, while headline-grabbing, leave a lot of room for uncertainty, which is never ideal when it comes to business,” concludes Paul. “As always, we’d advise businesses to seek professional rating advice, particularly as at present, the 2017 revaluation is still on track.”

Property Aspects Magazine would like to thank Paul Giness for his contribution to this article. You can read more of Paul’s views on George Osborne’s statement, in his LinkedIn post, Business Rates: What Will Osborne’s Announcement Actually Mean?