Reed Eyes Billions From Business Rates In England Devolution
Billions of pounds from business rates in england could be handed to regional mayors as ministers weigh a wider shift in tax control. Steve Reed said the government is looking at business rates or elements of business rates, with Rachel Reeves due to set out a broader plan at this year’s budget. The proposal would move a major local tax stream closer to England’s regional leaders, but not without a system to level up poorer places.
Reed’s equalisation warning
“There will always have to be an equalisation mechanism, because you cannot allow areas that are poorer to just sink because they can’t generate the additional revenue from their starting point” — Reed. That puts a hard limit on the plan: areas would not simply keep every pound they raised, even if more control moves away from Westminster.
“But you want a system that would encourage and reward areas for growing their economy faster or supporting their businesses better, and that would need to be recognised within the system.” Reed’s point goes to the core of the redesign. The goal is not just to pass over revenue, but to tie more local reward to local growth.
Rachel Reeves and local leaders
Earlier this year, Reeves said in her Mais Lecture that she was working on plans to give regional leaders control of a share of some national taxes. Officials are now looking at how to devolve various elements of tax, including business rates and parts of income tax, alongside a broader push to give mayors more power over justice, health and education.
“The chancellor pointed to devolving aspects of income tax, as we discussed, but certainly we look at business rates, too – or elements of business rates.” Reed said the idea was still being examined, not finalized. He also said, “Currently this is an idea that’s being looked at. It’s not a worked-up policy, but in principle, because fiscal devolution is on the table, that’s certainly an area we’d look at.”
Small firms after revaluation
Many small businesses saw their taxable rates rocket after a revaluation following the Covid pandemic, turning business rates into a politically sensitive subject since the last budget. That makes the next round of tax design more than a Whitehall reshuffle: it affects how sharply local firms feel the tax bill and how much room mayors have to shape growth.
“The sky’s the limit … nothing is off limits.” Reed said, while the chancellor is also consulting on how to implement a tourist tax. For businesses, the practical question is whether the new system keeps them exposed to the same central rules or lets regional leaders trade more tax control for more growth responsibility at this year’s budget.
