Memorandum by the British Chambers of
Commerce (SBR 9)
1. ABOUT THE
BRITISH CHAMBERS
OF COMMERCE
1.1 The British Chambers of Commerce (BCC)
is the national voice of local business; a national network of
quality-accredited Chambers of Commerce, uniquely positioned at
the heart of every business community in the UK. The BCC represents
100,000 businesses of all sizes across all sectors of the economy
which together employ over five million people.
2. SUMMARY OF
BUSINESS VIEWS
ON SUPPLEMENTARY
BUSINESS RATES
AND BUSINESS
IMPROVEMENT DISTRICTS
2.1 The governance model offered by Business
Improvement Districts (BIDs) is the preferred option amongst Chamber
members. The business community acknowledges that additional investment
is needed, specifically in transport infrastructure, but BIDs
already offer a potential model for this. BIDs give businesses
a vote and ensure certainty over the levy, scope and time frame
of projects. Developing and improving BIDs should be favoured
ahead of supplementary business rates (SBR) and should not be
jeopardized by SBR.
2.2 A number in the business community tentatively
believe that, with the governance model of BIDs and in particular
a business vote, a supplementary business rate (SBR) could offer
opportunities for additional investment whilst still ensuring
full accountability to businesses. However, businesses would only
consider an SBR for investment in transport infrastructure and
this in turn would have to be subject to ring fencing and a vote
by businesses on a clearly defined project.
2.3 Supplementary business rates must not
simply be an additional tax on businesses. Any revenue raised
if an SBR were introduced should not go into general Local Authority
budgets. If that were to happen, it would be liable to be spent
on services that do not have a direct bearing on economic development,
as has been seen over the past three years with the Local Authority
Business Growth Incentive Scheme (LABGI).
2.4 There is also a persistent issue about
value for money from National Non-Domestic Rate (NNDR). Businesses
do not receive good quality basic services from the rates that
they currently pay, leading to scepticism and mistrust about any
new levy. A business vote, with businesses on the steering group
and having a say in how any additional revenue is spent, solely
focused on transport infrastructure, would be the only means of
garnering trust and support for an SBR.
3. ACCOUNTABILITY
AND APPROVAL
MECHANISMS FOR
THE INTRODUCTION
OF A
SUPPLEMENTARY BUSINESS
RATE
3.1 SBR risks being relocalisation by the
back door unless a number of key criteria are met, all of which
BIDs already ensure. The primary requirement is that businesses
must have a vote. Without this, SBR would not have legitimacy
or accountability. Consultation as it is usually conducted by
Local Authorities would not be acceptable in relation to SBR.
Accountability would have to be to businesses, not "the wider
community" as proposed by Sir Michael Lyons as it would be
businesses paying the levy, not the community as a whole.
3.2 Furthermore, the voting system and consultation
process would have to be as simple as possible to ensure private
sector engagement. It could even be designed by businesses to
ensure it is fit for purpose.
3.3 To ensure accountability and approval,
the money raised by an SBR would have to be ring fenced to investment
in transport infrastructure, not go into general budgets. It would
also need to be additional to existing government spending on
economic development and transport, not a substitute for Highways
Agency or Local Authority spending.
4. THE IMPACT
OF A
SUPPLEMENTARY BUSINESS
RATE ON
EQUALISATION
4.1 Unlike with the National Non-Domestic
Rate, if SBR were introduced, subject to the criteria demanded
by businesses, the money would have to be retained locally to
be spent on transport infrastructure in that specific area. Equalisation
across the country would negate the role of an SBR, although it
remains appropriate for the NNDR and the purposes which that serves.
5. THE APPROPRIATE
SCALE OF
THE SUPPLEMENT,
THE THRESHOLD
FOR PAYMENTS
AND WHETHER
SMALL BUSINESSES
SHOULD BE
REQUIRED TO
PAY
5.1 An SBR should only be introduced for
a specific transport project, for which a clear business case
has been made and the duration of the levy fixed at the start.
It should not become an ongoing additional revenue stream for
poorly defined projects that are not finished on time and to budget.
5.2 Many Chamber members believe that an
SBR should only apply to larger businesses and those with a high
turnover, with a similar relief scheme to that in place for NNDR.
A one-size-fits-all scheme would be inappropriate. There is also
a general sense that if an SBR were introduced, it should be at
around two pence to start with for the duration of the levy so
that its effectiveness could be assessed. If it were successful
and another infrastructure project were then identified, the scale
of the levy could then by reviewed for a new term of the SBR.
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