Rate of return

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IT is a familiar refrain of local businesses; why do they receive so little in return for the rates that they pay? The answer is a straightforward one – this money becomes swallowed up by the Treasury which then decides how it should be allocated across the country.

In short, it is one of the reasons why £2,731 per person is spent on transport in London each year compared with a miserable £201 in Yorkshire – successive governments have believed that the capital’s interests should take precedence over the English regions. Given this backdrop, businesses will, rightly, welcome legislation that enables a proportion of their rates to be retained locally; this could pave the way for local infrastructure projects to be built.

That town halls will keep the rates paid by new businesses places an onus on leaders to put growth and economic development at the heart of their policy agendas. Put simply, it is in their interests to do everything possible to foster a new era of enterprise.

However, there are caveats. While the Government intends this law change to be at the heart of its localism agenda, there will be safeguards built in to ensure that no authority is financially worse off. To achieve this, they will receive money from town halls that have been pro-active. Is this right?

To some, this will be construed as an important safeguard to protect less affluent areas. To others, it is viewed as being counter-productive – where, therefore, is the incentive in districts over-dependent on the public sector to attract private investment and enterprise?

These, and other, questions need ironing out – but Local Government Secretary Eric Pickles has made a positive start in turning the whole of England into an enterprise zone that values the importance of small businesses.