Devolution will have far-reaching effect on business rates

Two thirds of business leaders are supporting plans to devolve more powers to England’s regions according to a poll by the Institute of Directors in the FT recently.

UK chancellor George Osborne has given the regions until September to deliver proposals for wrestling powers from Whitehall and the government is already in advanced discussions with Leeds, Liverpool and Sheffield about having directly elected mayors.

This follows the decision last year to devolve £7bn plus of annual spending to Greater Manchester.

What has this to do with business rates you ask? Have I clicked on the wrong Resource by mistake? Well no, because whatever decision is made on devolution will have far-reaching effects on business rates, how they will be charged and collected region by region.

The IoD surveyed 1,000 business leaders and found 65 per cent backed plans for devolution while almost 60 per cent supported some form of directly elected mayors for combined authorities.

The same number supported combined authorities being given the power to set or alter business rates, and almost three out of four believe the same about council tax.

However, there was strong opposition to devolving the power to keep or alter the rates of national business or personal taxes such as national insurance, income tax, VAT – a step too far for most it seems.

Mike Perls, Chairman of IoD North West, apparently says the “ambition and innovation” of Greater Manchester’s plan shows the potential of English devolution but his counterpart in the North East didn’t want to be outshone and claimed his organisation had been pushing devolution in their region for some time because “the Northern Powerhouse doesn’t stop at Manchester”.

A point worth making – particularly as Dunlop Heywood has offices in both Leeds and Newcastle as well as Manchester – so any Northern Powerhouse shouldn’t stop at the M62.

But it isn’t as if we haven’t had these kinds of devolved policies before when powers and business rates were left to local authorities prior to 1st April 1990. That system attracted criticism because of the disparity in the cost of business rates from authority to authority.

Let’s hope we aren’t destined to repeat mistakes of the past and devolution doesn’t turn out to be another vanity project of Osborne’s who has his eye on No 10 in five year’s time rather than the administration effectiveness within town halls across the north right now.

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