The Government’s review of local authority funding and the introduction of the Local Authority Business Rate Retention Scheme (BRRS) opens a new window of opportunity for developers and local authorities, says planning consultancy Turley Associates.
The BRRS allows all local authorities in England to retain up to 50 per cent of the business rates collected locally to be used as they wish, rather than receipts pooled nationally and then redistributed via the Formula Grant.
It is, according to Turley Associates, gathering significant momentum with council leaders, chief executives and finance directors as a valid and valuable financial mechanism to generate substantial income from the private sector.
David Smith, a director and head of business space at Turley Associates said:
“The intention behind the BRRS is that by providing a direct financial incentive it will encourage more economic growth via new development. And this provides a terrific window of opportunity for landowners and developers wishing to bring forward schemes.”
Richard Laming, Director of Economic Planning, Turley Associates adds:
“Developers that can effectively explain and present the business rate revenue implications of their development can use this to illustrate the ongoing lifetime benefits of their schemes above and beyond the immediate construction impacts. This is an essential part of case making with councillors and officers.”
To illustrate the potential benefit to local authority finances, take a hypothetical 250,000 sq ft warehouse or distribution centre (B8 use class) in the Midlands, generating £485,000 in annual business rates. The local authority would receive £242,000 every year. A 1m sq ft development would typically generate £1.94million in business rates a year, resulting in up to £970,000 for the local authority.
Local Authority Business Rate Retention Scheme is likely to remain until 2020. David concludes:
“Local authorities are under pressure to reduce budgets with decreasing centralised funding. The BRRS provides a window of opportunity for local authorities to generate significant and valuable revenue streams from local development. We are already using this to help our clients win support for their schemes.”