reform and Devolution context 29 th November 2016 Broad reasoning - - PowerPoint PPT Presentation

Business Rate reform and Devolution context

29th November 2016

Broad reasoning for Government approach

• The proposed changes are to make local

authorities:

• More financially independent and increase

local accountability

• Have an incentive to promote business

growth

• Design services for communities and

citizens

• Main thrust of proposal is Business Rates

Retention

Business Rate Retention - Concerns

• Business rates poor proxy for economic growth
• Does not reflect SME’s, knowledge industry, rural

economy, tourist economy, natural resources

• Not for profit organisations – Charities and social

enterprises – will not generate business rate income

• Timing – localisation in challenging economic

times

• No link between business growth and tax
• Sparsity and rural issues

Cornwall property market

• Range and choice/age
• Older buildings = heritage value,

attractive for ICT/media

• 40,000+ working ‘from home’
• Workspace crucial for growth journey
• Retail & banking moving away from

fixed property costs

• ‘Different’ role for town centres
• Cost factors: remediation of brownfield
• Planning rules – ‘Housing first’

Business Rate Retention - Positives

• Local influence over resource base – link

between local growth and income

• Link between LEP activity and council

resource base

• *

Will also generate increase in secondary activity and supply chain

• * Will also ultimately generate an

increase in the council tax base linked to more workers

Devolution & other examples

• No variance of multiplier
• No geographic discretion
• No sector discretion
• Money to budget, not just economic

development

• France – turnover tax linked to GVA
• Germany – property AND transfer tax
• Cornwall – big footprint, small numbers
• f workers (Economic Strategy)
• Re-set: Economies are ‘regional’
• Other fiscal devolution

What Cornwall needs

• Incentivise home based businesses
• Upgrade and refurbish businesses in

areas of high demand

• Encourage growth of renewable sector
• TIF to support gap funding
• Pressure on cultural sector/charging
• Post Brexit confidence

Enterprise Zones (EZ)

• EZ provided with:

– Simplified planning rules – ‘Local Development Order’ – Super-fast broadband – £150m tax breaks for new businesses

• ver 4 years

– Business Rate holiday for first 5 years (new businesses only)

• Business rate growth within EZ kept by

the Local Enterprise Partnership for 25 years – can be used in whole LEP area and Council not disadvantaged

• EZ Business Rates growth exempt from

the levy and resets for a defined period

Local Plan context

• Extant employment permissions
• Only a third delivered 2010-15 to meet

LP commitments (recession).

• Would reach target in 2040s!
• Intervention/support from Economic

Development

• 700,000sqm of workspace will generate
• growth. Infrastructure opportunities
• But backloaded into the 2020s

Local Plan

• Loss of 75,000 sm of employment space

since 2010

• Increase of 100,000 sqm
• Hit particular places
• But, reconfiguration of how business is

done

• London hit means investment
• pportunities for Cornwall
• Forecast 38,000 more jobs (perhaps
• nly a quarter to a third on ‘land’)