GOVERNMENT plans to “localise” business rates could cost the taxpayer up to £1.3bn, according to analysis by a national property consultancy.
The proposals would allow local authorities to maintain local control over an as yet undefined portion of the increase in rates revenues collected from successful, growing, local businesses.
But Lambert Smith Hampton said the proposals were overly complex and probably unworkable.
Head of rating Richard Wackett said: “It’s inevitable that the localisation policy’s inherent lack of regional parity will translate into intolerable unpredictability for business,” he claimed.
“Local authorities will likely view this as an opportunity to bridge any funding gap by increasing local business taxes. I would expect top-up of up to 5%. Considering rates raise £26bn, this equates £1.3bn extra bill for the tax payer.”
Mr Wackett said local authorities were also having second thoughts – including local authority representatives and the London council’s body, which represents London’s 33 local authorities.
At the same time, UK PLC’s anti-localisation stance had been made clear for some time, due to the unpredictable environment it creates for businesses, he said.
Eric Pickles, Secretary of State for Local Government, dismissed opponents of the proposals as “grumblers”.
But Mr Wackett said: “He should not be so quick to dismiss his critics. There are some serious problems.”
