London could be able to invest more money in its local public services and vital infrastructure following the 2017 Autumn Budget.
The announcement by the Chancellor of the Exchequer will see London local government, the Mayor and the boroughs, retain more of the money the capital’s businesses pay in business rates. This means that London will be able to retain any additional business rate income that is generated next year in the capital - excluding revaluation related growth. This is forecast to be in the region of £240 million in 2018/19.
In Spring 2016 the Government published a devolution deal for London that challenged the 32 boroughs, the City of London and the Mayor, to agree between themselves a scheme for the distribution of additional business rates. London Councils - which represents the 32 boroughs and the City of London - and the Mayor agreed a scheme to distribute the additional income from business rates from next April. The Chancellor’s announcement for 2017 Autumn Budget marks an important step towards bringing London in line with most other global cities by allowing the capital's local government control over a much wider range of taxes, in exchange for lower levels of government grant.
LDN 7 per cent, NY 50 per cent
At present London local government has control over around 7 per cent of locally raised taxes, but in New York the figure is around 50 per cent.
While welcoming the 2017 Autumn Budget announcement, the Mayor and the boroughs will continue to lobby Government for a fairer business rates system, following last April's revaluation. That revaluation meant that some businesses were hit with rates increases of as much as 45 per cent, with London businesses facing a collective business rate rise of up to £1.2bn, which will fund an equivalent tax cut for businesses in the rest of the country.
Cllr Claire Kober OBE, Chair of London Councils, said:
"This is an essential step towards more sustainable funding of the local services on which Londoners and London’s businesses depend. It will enable further investment in vital infrastructure to support economic growth and create more jobs across London.
"Agreeing a business rates scheme for London between the Mayor and all the boroughs has been key to the Treasury agreeing that London can keep more business rates revenue and shows our collective ambition to better serve London's residents and businesses by gaining more control over our city's finances."