In October 2007, HM Treasury and the Department for Communities and Local Government published a White Paper setting out the government's proposal to introduce a power for local authorities and the Greater London Authority (GLA) to raise and retain local supplements on the national non-domestic business rate.
What is the government's view?
It appears to be that this step naturally follows what it perceives as the recent extensive public debate on reforms to business rates in England; the recommendations of the Lyons Inquiry and the commitment to consider options for business rate supplements in the review of sub-national economic development and regeneration.
What does the White Paper say?
It sets out the following as the government's proposed model for business rate supplements, stating that there will be 4 levels of protection for business:
Revenue from supplements will only be available for spending on economic development - such as infrastructure. Plans will need to be clearly specified and committed in advance. Spending will be subject to a transparent accounting framework to ensure this.
A national upper limit of 2p in the pound will be set on the level of supplements that can be levied.
To protect smaller businesses from disproportionate burdens, properties liable for business rates with a rateable value of £50,000 or less will be exempted from paying supplements.
Where the supplement will support more than a third of the total cost of the project there will additionally be a full 'double-lock' ballot of businesses affected.
Have any reassurances been given to businesses?
The document gives a re-assurance that revenues from supplements will be locally raised and retained, with local decision-making on the duration of any supplement and the specific projects it should be spent on.
The government's stated intention is that only the highest tier local authority in any area should be entitled to levy supplements. These authorities will be able to cooperate to raise supplements to fund joint projects within the existing statutory framework. In London, the power will rest with the Greater London Authority. Shire counties will be required to consult their districts on any new supplement proposals.
The government has given a commitment that it will consult on technical issues before finalising any detailed arrangements.