Examination of Witnesses (Questions 700-704)
JOHN HEALEY
MP
23 JUNE 2004
Q700 Mr Betts: Each year they have paid
a lower percentage since the business rate was linked to RPI.
John Healey: Each year there has
been an increase in the business rate, but that has been set consistently
at the level of inflation. Businesses still contribute 22%—
Q701 Mr Betts: It is dropping each year.
John Healey: It is 22%.
Q702 Mr Betts: And dropping each year.
John Healey: That is right, ten
years ago it was 27%. It is still a substantial amount and it
is right that they make a contribution.
Q703 Chairman: The balance is shifting
from businesses to the local householders. You could argue that
some of the extra duties that the local authorities have been
given by central government have been more to help local businesses
than to benefit the individual householder. So is it not fair
that if extra is coming on, business should at least be increasing
or going back to the proportion it used to pay?
John Healey: I am not sure I agree
with your proposition that those are the right reference points.
The point is that business still makes a substantial contribution
to local authority finances.
Q704 Chairman: Yes, but so do the householders.
John Healey: We have put in place
other reforms which are better and more creative uses of the business
rates. You will be aware of the local authority business growth
incentive which comes into force in April next year. This is an
incentive for local authorities in being able to keep a proportion
of the increase in the business rates; it is to try to encourage
local authorities to play a greater role in the economic development
of their areas and if we had had that system in place over the
last three years, it would have been worth an extra £1 billion
to local authorities, an extra £1 billion which we have said
would not have been knocked off and will not be knocked off the
totals which have already been set in the spending review.
Chairman: We are overrunning, so we shall
have to close at that. May I thank you very much for coming; a
very useful set of evidence. Thank you.
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