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Huge hike in business rates highlights need for devolution to London government

  • By Rosemary.Davenp...

If businesses and councils are to thrive, the capital must have a separate business rates system decoupled from the rest of the country, London Councils said today.

The cross-party organisation made the announcement as draft revaluation figures released by the Valuation Office Agency (VOA) today (Friday 30 September) were expected to show significant rate rises for 2017. 

As part of the recommendations made in its joint response with the Mayor of London to DCLG’s consultation on 100 percent business rates retention, London Councils has also called for a devolved Valuation Office for the capital, accountable to London government. 

If implemented, the proposals would prevent London’s business owners from paying an ever higher share of England’s rates. As present they contribute around 30 percent but – if things go on as they are – they would pay an estimated 60 percent by 2040.

The recommendations would also help mitigate financial risks to councils, who set aside millions of pounds each year to prepare for potential refunds. By April 2017, the capital’s 33 authorities will have reserved approximately £1.3 billion for this purpose – money that could otherwise be used to deliver public services.

Cllr Claire Kober OBE, Chair of London Councils, said: “These new figures further vindicate our argument for a separate, devolved rates system for London which benefits both councils and businesses.

“Decoupling London from the rest of the country would enable us to manage the system more effectively, preventing much-needed funds being trapped in the appeals process and putting an end to businesses paying an ever higher share of England's rates.

“As huge bills hit doormats next year, we know a fresh round of appeals will be inevitable. If local authorities are to be self-sufficient, this cannot continue. Our message to Government is clear: devolve responsibility, let us design a more effective system and see London – and the rest of the country – reap the benefits.”

Analysis of VOA data  shows the number of unresolved appeals as a percentage of the number of properties across the 33 London authorities ranged from just over 10% to as much as 40% compared to the England average of about 15%.

By contrast in Wales, which already has its own devolved arrangements the relative backlog was only 9%.