SBR report criticised by city businesses

Aug 29 2007 by Alistair Houghton, Liverpool Daily Post

BUSINESS leaders have hit out at a think-tank report suggesting local councils could raise business rates to pay for a £190m investment in transport.

The Centre for Cities report yesterday said introducing supplementary business rates (SBRs) in Liverpool could raise millions for transport infrastructure projects.

The unit says a 4p in the pound special rate in Liverpool would raise £13m a year – enough to support a 30-year loan of £194m.

Yesterday, Cllr Mike Storey, Liverpool City Council’s executive member for regeneration, said he would look at whether introducing such rates would be viable in the city.

But SBRs have again been criticised by business leaders who say they could harm competitiveness, and should only be considered after full consultation with business groups.

The report says local authorities could pay for much-needed transport projects if they could raise their own money, and nationally SBRs could raise £10bn in loans over 30 years to fund transport projects.

Chris Burgess, chairman of the Federation of Small Businesses in Liverpool, said he was “surprised” the SBR idea had been resurrected.

He said: “Varying the rates is unnecessary. The SBR would hit local jobs.

“There’s no need to take further money from employers for local government, especially without their consent.

“The SBR has been shown not to work through bitter experience in the 1980s. Why are they attempting to resurrect a scheme that doesn’t work?

“If local councils want to raise money from business, then the Business Improvement District (Bid) system allows businesses to have a vote on the proposals.”

Frank McKenna, chairman of Downtown Liverpool In Business, said he feared additional business rates could discourage investment.

He said: “The way in which finance is operated at the moment, with central government deciding which local authority is going to be given what, is by far the most effective way of doing things.

“Certainly Downtown Liverpool In Business and its members wouldn’t support any change which would give local government a greater ability than they already have to increase local taxation.

“In Liverpool in particular there is already a way in which the local authority has been able to engage with the business community – the Bid. The private sector is given the opportunity to vote on what they want to proceed with.”

Jack Stopforth, chief executive of Liverpool Chamber of Commerce, said: “Most businesses have some concerns about supplementary rates.

“It’s all down to the old chestnut ‘No taxation without representation’.

“The benefit of the Bid is it provides a degree of representation and control by business over the additional money.

“If SBRs are to be introduced, then we would expect the business community to be consulted properly.”

Yesterday’s report said funding from SBRs could help fund such schemes as the cross-London Crossrail scheme and a new Metrolink for Greater Manchester. They could also help finance the Birmingham New Street station area redevelopment and a new regional conference and exhibition centre in Newcastle-upon-Tyne, the report said.

SBRs were supported by Sir Michael Lyons in his report into local government earlier this year and have also been backed by the House of Commons Communities and Local Government Committee.

Centre for Cities director Dermot Finch said: “This could provide significant funding for local infrastructure development in Liverpool. Supplementary business rates would also give businesses greater input into local decision-making.”

Cllr Storey said SBRs could be a way of giving Liverpool the extra money they needed to fund much-needed transport projects.

He said: “Anything which gives more power and responsibility to local authorities, whether it be Liverpool or anywhere else, must be a good thing. At the moment we have central government telling us what we can and can’t do.

“Our local transport is decrepit to say the least. We’ve got a good underground railway system, but bus travel declines every year by about four per cent.

“This may be an opportunity to improve our public transport.”

But businesses, said Cllr Storey, would be able to have a say in any SBR proposals that take shape in Liverpool.

He said: “Businesses are a crucial element in this.

“I always say that the city council doesn’t have a magic wand to make things happen. What we can do is create the right conditions.

“With this proposal, if it stands up, we would be in a position to do that. But it has to be done in consultation with the business community.”

A Treasury spokesperson said: “We have said the Government will consider options for supplementary business rates, working with local government, business and other stakeholders.

“It is too early in this process to be talking about what the final proposals will be. The Government will report back before the end of the year.”

alistairhoughton@dailypost.co.uk