UK ministers consider devolving business rates to regional mayors
7 reported3 unconfirmed
According to a single-source report from The Guardian, UK ministers are considering handing over billions of pounds raised by business rates to regional mayors as part of a major shake-up of the English tax system. Local government secretary Steve Reed stated the government is working on plans to devolve the tax, which has been the subject of recent protests by pubs and other hospitality businesses. The move is part of a wider plan to shift tax income to local leaders, due to be announced by chancellor Rachel Reeves at this year’s budget. Reed told The Guardian that the chancellor pointed to devolving aspects of income tax, and that business rates or elements of them are also being considered. He added that local areas would not simply keep whatever they raise, as an equalisation mechanism would be needed to prevent poorer areas from sinking, but the system would reward areas that grow their economies more quickly. The proposal is part of a broader push to give mayors more power over areas such as justice, health and education.
What’s reported
Ministers are considering handing over billions raised by business rates to regional mayors.
Steve Reed, local government secretary, said the government is working on plans to devolve the tax.
The move is part of a wider plan to shift tax income to local leaders, due to be announced by chancellor Rachel Reeves at this year’s budget.
Reed told The Guardian: “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 an equalisation mechanism would be needed to prevent poorer areas from sinking, but the system would reward areas that grow their economies faster.
The tax raised £26.4bn last year; ministers are not thought to be considering handing all that to mayors.
The chancellor is also consulting on how to implement a tourist tax, involving a supplemental levy on hotel stays, holiday lets and b&bs in certain areas.
Open questions
Whether the proposals will be announced in the upcoming budget given questions surrounding Keir Starmer’s premiership.
What percentage of business rates revenue might be devolved to mayors.
Whether mayors would have the power to set business rates themselves.
Key figures
Steve Reed, local government secretary
Rachel Reeves, chancellor
Keir Starmer, prime minister
Andy Burnham, potential successor to Starmer
Sadiq Khan, London mayor
JP Spencer, director of devolution policy at ThinkLabour
Sources: The Guardian
