Select Committee on Communities and Local Government Committee Third Report


2  The Government's proposals

3. The Government's proposals were published in a White Paper in October 2007.[5] The White Paper accepts the case for introducing a power for local authorities and the Greater London Authority (GLA) to raise and retain local supplements on the national business rate.

4. The Government's proposed model for business rate supplements involves four levels of protection for business:

  • Revenue from supplements will only be available for spending on economic development, such as infrastructure. Plans will need to be clearly specified and committed in advance; and spending will be subject to a transparent accounting framework to ensure this.
  • A national upper limit of 2p in the pound will be set on the level of supplements that can be levied.
  • To protect smaller businesses from disproportionate burdens, properties liable for business rates with a rateable value of £50,000 or less will be exempted from paying supplements.
  • Where the supplement will support more than a third of the total cost of the project there will additionally be a full 'double-lock' ballot of businesses affected.[6]

5. The White Paper continues:

Revenues from supplements will be locally raised and retained, with local decision-making on the duration of any supplement and the specific projects it should be spent on. The Government intends that that only the highest tier local authority in any area should be entitled to levy supplements. These authorities will be able to cooperate to raise supplements to fund joint projects, within the existing statutory framework. In London, the power will rest with the Greater London Authority. Shire counties will be required to consult their districts on any new supplement proposals.[7]

6. The Government supplemented the White Paper with a brief memorandum to us with "an explanation of why the Government decided to deviate from some of [the Committee's] recommendations." That memorandum is published as an Appendix to this Report.




5   HM Treasury and Communities and Local Government, Business rate supplements: a White Paper, Cm 7230, October 2007 (hereafter 'White Paper'). Back

6   White Paper, Executive Summary. Back

7   ibid. Back


 
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