Businesses across Tunbridge Wells have urged the council to seize the opportunity presented by changes to rates to make the town the number one destination for enterprise.
The reaction comes after chancellor George Osborne announced plans at the Tory conference to let local government retain all revenue from business rates by 2020.
Mike Cameron, who owns e-cigarette store Smoko in Camden Road, said: “I currently pay almost 48p in the pound in rates, on top of the rent.
“There are two things I believe the council should do. Firstly, cut the rate as it would hugely boost growth.
Reduction
“Then the proceeds of growth should be used to make the town a better shopping destination by using tax breaks to fill empty shops and encourage seven-day trading.”
Mr Cameron believes this would ensure the town would stay a dynamic place for retailers and encourage job growth.
Robert Hogben, who runs the Mount Edgcumbe gastro pub, agrees a reduction in rates would cement the town’s reputation as a good place to do business.
He added: “I am not expecting to see it halved, but I would welcome a reduction. The money we save could then be reinvested into the company to help it expand and take on more staff.
“At the moment, we are trying to provide a service but the rates are just crippling. The current level is definitely anti enterprise.”
But one business owner, who did not wish to be named, warned the new powers had the potential to backfire.
He said: “It is going to create a postcode lottery for businesses. With different boroughs charging different amounts it will all depend on the attitude of those in charge.
“It could also be dangerous if government makes cuts to local authority grants, as they could end up bumping up rates to compensate for their losses.”
Tunbridge Wells borough councillor Paul Barrington-King, portfolio holder for finance, said the announcement was ‘very welcome’ and showed the government was ‘listening’ to local authorities.
He said: “We have been calling for this over many years. TWBC collects £52 million from local businesses but only receives back £2 million. The public who support local businesses have found it quite hard to believe that only 4p in the pound is retained locally by the council to support local services.”
Stronger
In July, Cllr Barrington-King told the Times it was ‘irksome’ for the council to be seen as ‘the bad guys’ when collecting rates as it currently has no say over how they are set or how most of the money is spent.
In response to the new plans he said: “This change will put the council in a stronger position to work with businesses, to help support independent traders, nurture new businesses and help deliver growth so everyone can benefit from a thriving borough.”
But Cllr Barrington-King warned any changes would have to be both ‘affordable’ and conducted in a way which ensures a ‘balanced budget’.
Communities secretary and Tunbridge Wells MP Greg Clark said: “I’m pleased Tunbridge Wells Borough Council is fully supporting our reforms which will enable local government to keep all the business rates they collect.
“These changes represent the biggest transfer of powers from Whitehall to town halls in living memory, and will be of real benefit to local residents.”
Borough councillor Paul Barrington-King explained the position of the council.
He said: “It is local government overall that by 2020 will be able to keep all revenue from business rates, not individual councils.
“There will still be a system of distributing business rates from economically successful areas such as Tunbridge Wells to other parts of the country whose public expenditure exceeds the amount they generate from business rates. Tunbridge Wells will still only be guaranteed £2 million of the £52 million collected.
“The proposals allow individual councils to keep the extra business rates from new growth over the existing baseline. Ergo there is now an option for councils to explore business development growth options, allied to suitable planning applications, before we realise any growth in our returns. If Tunbridge Wells does not grow, the share of business rate will remain the same.
“Also by 2020, local government will not receive any central government funding which will result in the loss of £1.6 million for Tunbridge Wells from revenue support grant.
“We do not have the details yet from central government of what ability local councils will have regarding the setting of business rates and how any discounts could be funded.”
John Allan, national chairman for the Federation of Small Businesses, said: “The surprise announcement to allow councils to retain business rates presents a huge opportunity for local authorities and business to work together to boost local growth, develop a fairer tax system and create the jobs of the future.
“We also know there will be challenges to get the new system right. We want to ensure businesses don’t get short-changed. It is essential the new rates structure works for all our 5.2m small firms.”
Gary Porter, chairman of the Local Government Association, said: “The announcement by the chancellor is great news for councils and shows the government has listened to the arguments set out by local government. The LGA has long-argued that the current system of business rates needed reform so councils could effectively support small businesses and boost high streets.
“Councils have been hugely restricted in their ability to introduce local discounts with government setting the charge and keeping half business rates income. With greater local control, councils will have flexibility to reduce business rates for the type of shops and businesses residents want.
“While this is good news for councils and businesses, local authorities will face almost £10 billion of cost pressures by 2020 so we will now seek to work with government about how this proposal can be introduced more quickly.
“We would expect measures to ensure local areas with less ability to generate business rates income do not suffer as a result of these changes and all councils are also given leeway to vary business rates up as well as down.”
What are the key points of the announced reforms?
By 2020, central government funding of local authorities through the revenue support grant will be entirely replaced in favour of locally raised income via business rates. The nationally set ‘uniform business rate’ will be also abolished, allowing scope to lower rates.
The idea is to give local authorities the powers to encourage new businesses into their area and any growth in rates income will be kept by the council. In addition, it is hoped the proposed reforms will give local authorities greater certainty and improve their ability to plan ahead.
What does the government expect local authorities to do with the new powers?
The chancellor said full retention of rates is going to be worth £26bn but councils are expected to use the income for extra responsibilities. MP Greg Clark, in his role as communities secretary, is due to work with local government to look into what the new responsibilities will be, but the abolition of existing grants for some services, such as public health or new homes bonus, are on the cards. Under the plans, local authorities will be expected to foot the bill for these grants themselves, saving the treasury about £11bn.
What could be the drawbacks of the new scheme?
Currently most of the details of the new scheme have not been determined. One cause for concern is that areas of deprivation with little business activity could suffer further. But George Osborne has hinted at retaining some transfers from councils that generate large amounts of business rates income to those which do not.
Local authorities will also be less insulated from market forces, with business closures having a far larger impact on council budgets.
