Thursday, July 21, 2011

Wales must reform business rates to help businesses and aid regeneration

Welsh Liberal Democrat Assembly Member, Peter Black and the party’s Parliamentary Spokesperson in Swansea West, Peter May have jointly called on the Welsh Government to follow the example of Ministers in Westminster and give Councils the right to set local business rates and keep the revenue they generate.

Currently, local councils collect business rates (technically, the National Non Domestic Rate) on behalf of central government. The Welsh Government then redistributes money to councils in the form of the Revenue Support Grant, according to a population-based formula.

"Under the current local government funding system, government dishes out grant allocations to councils each year based on an incomprehensible formula that is far too complex and lacking in transparency," said Peter May. "Councils are left at the whim of the formula-setter in Whitehall and Cardiff Bay, and there is no incentive to promote business growth either. All you get are the extra HGVs, but none of the rates income."

He went on: "Under the new system being proposed by Liberal Democrat Local Government Minister, Andrew Stunell, councils in England will be able to keep the money raised by business rates in their own area. They will then benefit from any future growth in local businesses by keeping the extra revenue generated through the rates system. In addition, Councils will also have the power to borrow against this future income so as to invest in regenerating run-down areas. This could be a a win-win for Swansea, subject only to some safeguards for rural councils and others with lower business rate bases.”

Peter Black added: “The Welsh Liberal Democrats believe that the business rate system is not fit for purpose. We want to see these reforms apply in Wales as well. That will also enable Councils to help small businesses who invest in improving their premises or who are struggling to survive. The Welsh Government cannot ignore this important reform in England. Welsh councils need tools like this to boost their local economy. They should be given them.”

Enquiries by Aberavon & Neath Liberal Democrats suggest that the immediate advantage to Neath Port Talbot is not so clear-cut, bearing in mind the loss of BP, a large ratepayer, and the scaling back of other industries in the borough. However, re-localisation would give more flexibility to Neath Port Talbot finances and transparency for the residents, as well as reducing administrative costs in Cardiff.

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