Monday 26 September 2016
Do not make London a 'cash cow' warning on Business Rates
As the Government consultation closes, London Chamber of Commerce and Industry (LCCI) has urged Ministers to be wary of 'unintended consequences' as Business Rates are overhauled across England.
LCCI has long advocated 100% business rates retention as part of a greater devolution package. Recent polling found that 74% of business were in favour of businesses rates being retained by London government.
However, implementation must be done in a way that works for business. For example, LCCI is not convinced there should be an additional business rates infrastructure levy on London businesses - which already pay a levy to help fund Crossrail.
LCCI makes a number of recommendations on the proposals to make retention work for businesses and to mitigate the impact of the upcoming revaluation. These include:
- A proportion of retained business rates should be earmarked for economic growth (e.g. reliefs, support for micro/SMEs and essential infrastructure)
- There should be enhanced transitional relief to alleviate the expected, negative impact of the upcoming business rates revaluation in London
- Government should assess the impact of office to residential conversions on the business rates tax base
- Government should consider proposals for London to be 'uncoupled' from the national, valuation system that gives London's businesses an unfair deal
Chief Executive of LCCI, Colin Stanbridge said:
"Government must take note that this consultation on 100% retention comes at a time of wider uncertainty with more than two in five (44%) of London businesses saying that they are worried about the impending revaluation of business rates next month, which is likely to see many in London paying far higher rates from April 2017. That may result in many negative impacts across the capital.
"It is important that businesses in London, in particular SMEs, that are being asked to pay higher rates than the rest of the country can see that in doing so they benefit from investment in helping them set on an in ongoing investment in their surrounding environment.
We have been broadly supportive of 100% retention of business rates as we believe that London government can best understand how taxes should be collected and spent for the good of the capital.
"We should be quite clear that we are not asking for special treatment for London nor do we seek to implement changes that will see the rest of the country lose out, but at the same time not to pursue this path risks businesses shutting up shop or moving out of London altogether
"We need to be wary of potential pitfalls including business being viewed as a 'cash cow'".
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NOTES TO EDITOR:
1. London Chamber of Commerce and Industry (LCCI) is the capital's largest and most representative business organisation, with members ranging in size from multi-national companies to SMEs and sole traders.
2. Colin Stanbridge, chief executive is available for further comment and interview.
3. ComRes survey for LCCI of 508 businesses, May-June 2016, Q2 2016 QES)
4. National Valuation System - The system under which London is expected to continue to pay a greater and greater share of national business rates pool, up to 2040 (with the rest of the country paying less).
5. Read LCCI's full consultation response here.