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How city businesses will work with council to boost economy

BUSINESS rate payments are figuring large in the coalition Government’s drive to create growth and jobs and address localism.

BUSINESS rate payments are figuring large in the coalition Government’s drive to create growth and jobs and address localism.

The Department of Communities and Local Government has introduced a Finance Bill which includes a local business rates retention scheme.

This will enable local councils to retain a proportion of the business rates generated in the area.

The approach is to give local autonomy, help to strengthen the local economy and build stronger relationships with business to boost jobs.

The increase in the income generated from business rate, due to greater enterprise and economic growth, is to be retained by the local council.

Before all of that happens, I think it is worth all companies checking that they are not paying too much already.

Business rates are calculated and collected by the local council.

The amount collected is then paid to government, put into a pool and redistributed by government to meet the needs of local councils.

The amount due is calculated by assessing the annual rent at which the property can be let, the rateable value (RV), multiplied by the pence in the pound, which is varied each year.

This year 2011-12 the standard rate in the pound is 43.3p but for small businesses 42.6p.

The RV can also be increased by a ‘material change’, such as an improvement to the property that increases its rental value.

It is important to ensure that the rateable value is correct and note that if an appeal is made the RV can go up as well as down.

A local chartered surveyor can check if there is any likelihood of the RV being reduced before an instruction is confirmed.

(The first 30 minutes of a consultation are free, call the Rics contact centres on 08703 331 600 to find your nearest chartered surveyor).

There are number of avenues that companies should explore which could lead to a lower rates bill; small business rates relief, for instance, deferments and even exemptions.

Some of the more high profile schemes are enterprise zones with a 100% rates discount up to £275,000 over a five-year period.

Here the local council can retain the growth of business rates in the zone for a period of at least 25 years.

Rates can help whole districts to improve. Some areas have been designated as business improvement districts, where councils and businesses are working together to improve the local environment.

This is happening in Newcastle under Newcastle NE1 Ltd, with examples such as the city bike hire scheme, the Newcastle City Marina and the proposed transformation of Central Station. The cost of this is met by a local increase in the payment of rates in the city centre to improve the local area.

The most adverse impact of rates can be seen in the introduction of empty property rates.

While this in the short-term has encouraged reductions in rent and larger incentives offered for tenants to take space, it is one of the major impediments to new development happening.

The biggest positive impact will be in the ability of the local council to borrow on the growth of the business rate income and invest that amount in local infrastructure and sites, of which Newcastle’s Science Central is a good example.

This could help to kick-start the construction and property sectors at a time when we are in most need.

It is these and wider economic and financial matters that will be the subject to the Rics North East Summit on January 20 at Centre for Life, Newcastle.

For details call or email Rics North East logistics coordinator Susan Doberman on 0191 221 0359 or sdoberman@Rics.org

Kevan Carrick is a partner at JK Property Consultants LLP and a policy spokesman for Rics North East

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