Archive for August 1, 2011

National Non-Domestic Rates

August 1, 2011

Just in case you weren't following...

Credit to the Government; when they published their ‘Local Government Resource Review: Proposals for Business Rates Retention’ they also published a plain English version (you can tell one is needed from the title alone) of the report for those of us who choose not to be bored to death by the full technical majesty of it.

However, I think this might be where the credit stops.

The general principle of the review of business rates (otherwise known as a the National Non-Domestic Rate – see I told you the plain English guide was a good idea) is that each local authority should be free to profit from growth in their own local business rates.

At the moment business rates are passed straight to national Government and then passed back to Local Authorities in the form of grants. As the plain English paper helpfully points out:

This dependence on central government funding also means there is a greater incentive to design services in order to secure government funding, rather than to respond to local communities’ needs or align spending with citizens’ service preferences

The Government are therefore keen to ensure that local authorities are not pursuing the agenda of central government but are rather free to collect their own rates and spend them on things that will benefit their local community.

So far so uncontroversial.

The problem with the general theory is that this would be massively unfair if done unilaterally. I feel bad picking on London(well, I don’t really) but some local authorities in London would massively benefit from this and others (perhaps in areas with more houses and farms than huge tower blocks of offices) would suffer.

Therefore, the clever people in the DCLG came up with a plan. They would baseline the rates each authority receives and any increase in the rates received locally would be kept by the local authority.

This is meant to be seen as the Government passing power back to the local authorities but in reality it is simply removing the tyranny of the Performance Indicator and Dedicated Grant so beloved of Labour and replacing it with the tyranny of economic growth.