MPs issue warning over business rates devolution plans

The Communities and Local Government Committee has stated that Government plans to permit councils to retain business rates must address issues with the appeals system.

An interim report published by the Committee found that appeals by ratepayers have impacted significantly upon business rates revenue: local councils have had to set funds aside in case of successful appeals.

In addition, growth incentives have also been affected by such appeals.

The report proposes many options to resolve the problems generated by the appeals system, including handling appeals outside of the business rates retention system and providing separate funding for them.

Commenting on the issue, Clive Betts MP, Chair of the Committee, said: ‘Our interim report has highlighted a host of issues regarding the reformed business rates system and we are calling on the Government to take these on board and work closely with local government to find the necessary solutions’.

The Government unveiled plans to reform the business rates system during the 2015 Conservative Party Conference. Chancellor George Osborne stated at the time that such a reform would devolve power for over £26 billion of revenue to local councils.

Authorities will have the power to choose the level that business rates are set at, enabling them to better compete with rivals.

The Government plans to introduce the new business rates scheme by 2020.