When it comes to the redistribution of wealth, things were far simpler in ye olden days when Robin Hood and his band of Merry Men (and women I’m sure) would do their thing. Their economic policy of robbing the rich to give to the poor was limited to Sherwood Forest and the surrounding Nottinghamshire countryside, set in a time when measuring its impact on the rest of the UK and balancing the need to stimulate the commercial property market was probably not high on their list of priorities.
The government has recently completed a consultation on changes to England’s system of business rates, looking at how they are collected and then distributed, with a view to encouraging growth in commercial property development and the wider UK economy.
The present arrangement sees the business taxes on commercial property and other ‘non domestic property’ paid to local authorities, then placed into a central pool and reallocated to councils across the UK. The funds, which totalled £19.6bn in 2010, are used to pay for services including the police and fire brigade.
The new proposals could see individual boroughs retaining the funds received from business rate payments. This will incentivise councils to look at ways of raising their own income, according to ministers.
Currently the amounts vary, for example Westminster received £1.8bn while West Somerset gained £8.5m. This could mean commercial property owners come under pressure to increase their payments, said one analyst, observing that ‘if councils are trying to boost their rates income, it may also encourage them to look more closely at buildings where owners may not be paying enough’.
Another saw it as good news for commercial property developers, who felt councils would be motivated ‘to reduce the time looking at planning applications’.
Changes are scheduled to take effect from 2013 but, unlike the green tights of Robin Hood, the proposals are not reported to be clean cut. Instead, the complexity of the system may mean it takes longer to implement them.
