The Confederation of Business and industry (CBI) have forecast that an extra £400 million will be generated over the 2016-2017 period due to more business’ opening their doors. This sounds like a good thing, however for business’ to have the longevity to keep paying these business rates is another thing totally.
The CBI state that the profits from business rates are distributed (50/50 between local councils and the government) since 2010 and up to 2020. After this local councils will receive 100% of the business rates from local business’. This also gives councils the flexibility to increase rates if needed and sustainable up to a maximum of 2 pence on the pound. It also has given them the power to reduce rates in towns across the land that have very different economic conditions to contend with.
For example: a struggling little town with a scattering of boarded up shops up and down the high street and neighbouring streets could be given a rate reduction by their local council to encourage start up business’. Some local areas have rates as high as rent which makes it uneconomical for a business to even get off the ground or existing business’ to even make ends meet. This handing over of the power to increase or decrease the business rates is a massive step towards individual towns with their own little economy getting a say in the destiny of regenerating their local shops and helping kick start a few new business’, obviously generating jobs within the local community.
So far, 90% of councils have increased their income since the 2013 change to give them half of the money generated by business rates. However, the government have to balance the books somewhere, and giving local councils half of their communities business rates has come at a cost. The government has reduced grants given to local councils to offset the monies the government are not receiving from all the business rates.