Since the arrival of Prime Minister Brown, and the publication of the Sub-National Review in July, there’s been a new impetus towards Supplementary Business Rates (SBRs). Surprisingly, councils and business leaders agree on a lot: the need for greater financial devolution, local decision-making, and stronger joint working. They also agree that ring-fenced, time-limited SBRs, with appropriate reliefs for small businesses, could generate new resources for transport investment in England’s major cities.
We’ve now reached a point where new financial powers for cities are within reach. But the sticking point – unsurprisingly – remains the question of a business vote.
The debate has often been portrayed as a fundamental disagreement between business and local government. But it’s not that simple. As a recent LGC survey showed, many local Chambers of Commerce are more concerned about working with councils to deliver transport improvements than they are with a formal vote (LGC, 28 June).
‘Business’ isn’t monolithic. As part of our work on SBRs, we’ve found a spectrum of views within the business community, both nationally and locally. Some business organisations still want an automatic vote before SBR is implemented, but this could delay its take-up in areas where there is greater consensus on making SBRs work. In many cities, the need to finance infrastructure improvements is so great that business leaders prefer an SBR – even without a vote – to a missed investment opportunity.
The arguments around a business vote have been finely balanced. However, Whitehall is now looking closely at SBR. It’s time to tackle this issue head on, and for Ministers to resist demands for an automatic business vote.
We’re asking Ministers to consider three key principles:
SBR should be a stepping stone to greater financial devolution. But more radical changes to the local financial tool-kit will depend on SBR’s success, so it’s important to get the policy right. A permissive framework, with clear minimum standards, legal safeguards for businesses, and the option to hold a local vote, is the only way to build on the emerging consensus between business and local authorities. Otherwise, England’s cities and towns could miss a golden opportunity to lay the foundations for future economic growth.