England & Wales Communities and society

Tonight: Business rate review


We are expecting a statement on the local Government Resource Review this evening at 5.30pm.

Unlike previous enquiries such as Layfield and Lyons, the terms of this review have been set deliberately tightly to consider how to deliver “the optimum model for incentivising local authorities to promote growth by retaining business rates, whilst ensuring that all authorities have adequate resources to meet the needs of their communities”.

Eric Pickles is known to believe that a limited, pragmatic approach will achieve more than previous all singing all dancing reviews which recommended sweeping but ultimately non-implementable reforms.

The current review has had a relatively low profile but despite, or possibly because of, its limited scope it could effect radical changes to the political geography of the country.

We know that the review will recommend a greater local retention of business rates (indeed this is its whole purpose). Sir Bob Kerslake described this at a recent event as “the biggest game changer” while confirming that there will not be any proposals to allow councils to set rates, a move firmly opposed by business leaders.

Many authorities will welcome this, but it is an issue that looks very, very different depending on where in the country you sit. About a third of councils would not need a government grant if they could retain their business rates but, at the other end of the spectrum, there are others who do not take in nearly enough in rates to be financially viable without additional funding.

DCLG recognise the need for an on-going system of redistribution and describe the nature of this as the ‘only’ question left to be resolved (though one might argue that it is in fact the only question there is full stop).

One option under consideration is to redistribute on a regional basis, possibly with councils dishing out the money to avoid having to recreate a regional administration to do so.

This is what London Councils, give or take a dissenting borough or two, have been pushing for. Of course it would still leave the question of who decides how much each region gets and how and it remains to be seen how much diversity the government will actually be willing to accept in the name of localism.

But while we may be waiting on the detail we should not underestimate how important the principle behind the review is. Economic localisation is a first step in a fundamental shift in the centre of political gravity whereby the local becomes the primary site of political and economic identification.

This may not be quite what the Secretary of State intends and it may worry those who see the nation state as the most important unit of political organisation, but for those who believe that local, national, and indeed transnational , identities can sit alongside and complement each other this should be a welcome development.

You will be able to watch the statement live on Parliament TV here