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Business rates raise about £25 billion each year in England; which is increasingly important to the funding of local government as we move towards the government’s aim that local authorities will retain 75% of this income by 2020. Yet the administration of the tax is divided; policy issues are determined by the Ministry of Housing Communities and Local Government (MHCLG); assessment for the tax is the responsibility of the Valuation Office Agency (a part of HM Revenue and Customs); and collection of it is undertaken by individual local authorities. Sajid Javid, the Secretary of State at MHCLG, has launched “an independent review of the internal processes and procedures that underpin my department’s governance of the business rates system”.
The terms of reference of the review are to consider: complexity; governance and management; capacity and capability; openness and culture in the governance of the business rates system at MHCLG. The review will be led by Andrew Hudson, formerly of both HM Treasury and the VOA, and is to consider “the internal processes and procedures that underpin its oversight of the business rates system including policy decision-making and analysis and modelling”. The review is also asked to make recommendations for improvements in these areas. The Secretary of State expects the review to “progress at pace” and hopes to be able to announce a timetable for this shortly. The review findings will be published.
Local authorities and others may welcome the review of policy and, perhaps, the opportunity to take more of this back in their own control, but ratepayers will see little in the terms of reference that will give them comfort. The review looks unlikely to address the key concerns of ratepayers which are that the tax is at a very high level compared to other corporate taxes in the UK and compared to other property taxes throughout the world. The review that has been announced today is interesting and will, no doubt, be helpful. But it is not the fundamental one that the business rates system needs. Quis custodiet ipsos custodes?
