IPPR calls for business rates rethink

The Institute for Public Policy Research (IPPR) has claimed that the government’s plans to devolve business rates to local authorities failed to provide poorer areas with an incentive to grow their economies.

The think-tank warned that councils could face further losses if the government abandoned the levy on disproportionate growth, which could cost up to £1 billion over the next five years.

IPPR proposed a model which involved increasing a council’s funding by multiplying its business rates growth by the required funding. It claimed the move would guarantee councils have ‘an equal incentive to increase their retained income, irrespective of whether they are rich or poor’.

The think-tank also argued that the scheme would be more likely to provide funds for a safety net with imposing an additional levy.

Alfie Stirling, research fellow and Spencer Thompson, economic analyst, who both authored the report, commented: “Retaining a higher proportion of tax revenues derived from a wide variety of different revenue streams builds in greater flexibility and resilience.”