'Localise business rate control'

Wednesday, February 24, 2010

Localising the tax system would help to drive better business and encourage councils to be more proactive, a new report from The All Party Urban Development Group says.

It suggests that major reform of business rate control should begin with local authorities being given increased powers to develop schemes, such as tax increment financing, to encourage investment in their regions.

Group chairman Clive Betts said: "By giving councils the cash created by local investment we would encourage local authorities to promote new business in their local areas. At a time when the UK is desperately in need of new jobs, business development is crucial to overcoming unemployment.

"Localisation of business rates would cut out the middle man and create a system where local authorities can be more directly involved in controlling regeneration and development in their areas."

The report, Next Steps: a regeneration agenda for the next government, also considers the need to control planning reform and increase housing supply.

The report's full recommendations include:
• Targeting public sector investment on the areas that need it most
• Introducing tax increment financing (TIF)
• Limiting planning reform after the first year of the next government and increased use of planning performance agreements
• Focusing on increasing the housing supply and adjusting stamp duty to encourage greater investment in the private rented sector

Nick Raynsford, honorary chairman of the group, commented: "The next government must address some fundamental challenges in regeneration in order to secure economic recovery and the reinvigoration of our communities. Intelligent, targeted public spending is just one of these. Also fundamental to UK urban renewal is matching incentives for local councils to build with the appropriate discipline to make sure homes and jobs are delivered."