£23bn business rates revenue not good news for everyone

Government figures reveal local authorities in England are expecting to receive their share of a “record-breaking” £23.5 billion in business rates next year.

Based on figures released earlier this month, local government minister Marcus Jones said that the projected £400 million increase in business rates receipts could be attributed to the rising number of new businesses across the country.

Interesting use of the word “could” here as the figures came out at the same time as the CBI pushed out its pre-Budget submission. They criticised the Government for milking small businesses over recent years with an outdated business rates regime. The CBI obviously feels its members are being used as a Government cash generator that is deemed politically acceptable as it doesn’t impact the general voting electorate or count as a tax hike in the true sense of the word.

Since 2012, local authorities have been able to keep 50% of the business rates that they collect. This is due to increase to 100%.

As widely reported, from 2020, the government intends to abolish the uniform business rate (UBR) and give local authorities the power to cut rates as a way of attracting businesses to their areas. Areas with elected mayors will be given additional powers, including the ability to increase business rates by up to 2p in the pound with the support of local businesses.

So a record-breaking £23.5bn is forecast for business rates but whilst the Government is trumpeting this as good news, it certainly hasn’t been welcomed as such by the businesses that are having to pay it.

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Since most councils will need to get as many resources as possible in order to simply maintain statutory services and keep the lights on why would they choose to lower rates at all? They will need to raise them. Just look at what is happening over council tax this year with the vast majority of authorities having to raise and accept at least the chancellor’s permission to take 2% more for social care. Problem comes when another recession hits or major businesses move out and councils are so reliant on business rates to fund services. There will clearly be losers and winners, in the longer term I guess it means you will still get public services in areas where the market is buoyant but nothing elsewhere. A recipe for even greater social division and geographical in equality.

By Cynical LA planner

I agree completely with you Cynical.

I keep hearing that phrase “winners and losers” all over the place, and I get the impression there are some out there, such as certain lobbyists, who would dearly like us all to accept this and get used to it.

As a plan to get everyone, 19th C peasant style, flocking to the designated 3 or 4 big cities for work, it is basic and crude and unworkable. It could well end up breaking up England, let alone the UK.

By Mike