Brian Connell is a Westminster City Councillor where he is Cabinet Member for Business, Enterprise and Skills. He argues here that since a new approach to economic growth will involve a stronger relationship between the private sector and councils, businesses should get a better deal from local authorities.
The economic mire that Britain is in has been caused by a decade of government favouring public spending over private investment. A radical rebalancing of the economy is required from one built on centralised targets delivered through public spending by far-off quangos to one that is based on local growth driven by private enterprise. But if we are to expect businesses to pick up the baton and take responsibility for driving economic growth, we must give them a larger stake in the communities in which they operate.
Last week I submitted Westminster City Council’s response to the Government’s consultation on Local Growth. Ministers have sought views on Tax Increment Financing, a business rate growth scheme and, potentially most liberating for councillors, the local retention of business rates.
Local authorities can play a crucial role in making the business environment in an area successful and attractive for investors. However, they currently have no incentive to do so. Whilst the education standards, planning policies and transport links impact on our residents, local businesses and their profit margins can be even more affected by the decisions taken in town halls.
At present local councils act as tax collectors for central government. Like any tax collector, we can be unpopular and businesses often rightly ask what they receive for the business rates they pay to us. Of course, the answer is that as we have to pass on all of that money to the Treasury. Businesses don’t receive anything specifically for the thousands of pounds many of them pay to councils all over the country. Not only does this cement the subservient relationship local authorities have to government, it also preserves the unhealthy disconnect between locally elected politicians and the businesses that employ our constituents and contribute so much to the vitality and wealth of an area.
Reform of the business rate regime would go some way to engaging business interests and reconnecting councilors and local MPs with local economic growth. A new system should be built on four key principles: