9 October 2007
Business rate supplements: a White Paper
The Government has today published Business rate supplements: a White Paper, in which it announces the introduction of a new power for local authorities in England to raise and retain local supplements on the national business rate in order to fund projects that will promote economic development.
This proposal, which builds on the review of sub-national economic development and regeneration, is a substantial devolution of power to local communities in, allowing them to make investment decisions that more closely reflect local economic need.
The announcement follows extensive public debate on reform to business rates in England and the recommendations of the Lyons Inquiry into Local Government.
The Government's proposed model for business rate supplements involves four levels of protection for business:
- Revenue from supplements will only be available for spending on economic development in addition to existing plans. Proposals will be subject to detailed statutory consultation.
- A national upper limit of 2p in the pound will be set on the level on 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' vote of businesses affected.
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 intends that only the highest tier authority in any areas should be entitled to levy supplements. These authorities will be able to cooperate to fund joint projects, within the existing statutory framework. Shire counties will be required to consult their districts on any new supplement proposals. In London, the power will rest with the Greater London Authority (GLA). The Mayor of London has announced that he envisages levying a business rate supplement of 2p in the pound across the GLA area from April 2010, with revenues to be used to service debt for construction the Crossrail railway project.
The Government will legislate to enable local authorities that wish to levy the first supplements by April 2010.
The Government will consult on technical issues before finalising the detailed arrangements.
Business rate supplements: a White Paper is available in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.
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Related links
- Department for Transport Press notice: Crossrail gets go ahead as funding deal (GNN website)
- Statement by Mayor of London, Ken Livingstone on the funding of Crossrail (London website)
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