The British Independent Retailers Association (Bira) has welcomed the decision to put locally raised business rates back into the hands of local authorities, but warned that Nick Clegg’s other idea — to allow rates to vary — could be double-edged.
The association, which represents around 7,500 members across the UK, has vociferously argued that the existing centralised system gave no incentive for councils to improve services for local businesses, as any new income would be simply handed back to central government to redistribute.
However, the government said last week that it plans to let councils keep locally collected business rates as part of their budget.
The move will reverse a centralised approached to collecting business rates and distributing them as grants that has been in place for 23 years.
Property costs are one of the ‘Three Ps’ — the others being parking and planning — that Bira has identified as being root causes of growing town centre difficulties. It insists that rates should fall if town centre turnover falls.
“This will be a good decision if it results in councils being more responsive to the needs of local businesses, so it is in tune with the developing localism agenda,” said Alan Hawkins, CEO of Bira.
“If local councils were to be freed to vary the rates this could enable them to cut rates to match falling business revenues in failing town centres, but this same freedom could equally lead to an unwelcome free-for-all in rating,” added Hawkins.
Business rates are also known as National Non-Domestic Rates (NNDR) and are collected from non-domestic premises including shops, offices and factories.