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Small businesses unconvinced by Local Government Finance Act

Small businesses remain sceptical about the Government's drive to hand local authorities more control over how they spend public money in their area, according to research from the Forum of Private Business (FPB).

The UK's local government finance system is one of the most centralised in the world. But businesses are doubtful that measures contained in the Local Government Finance Act - such as redistribution of money from additional business rates - will actually benefit them.

The FPB's research found that, of the firms surveyed:

  • more than half (56 per cent) of FPB members believe the changes allowing councils and local businesses to consult on redistributed money would have little or no impact on their businesses
  • six per cent felt they would be paying for something that did not benefit them 
  • less than a quarter felt there would be a positive impact on the economy
  • three quarters said they would rather not see any supplementary business rates in their area, even if the cost was small.

The Forum's head of policy, Alex Jackman, said that small businesses had little confidence in council spending and delivery of schemes that would lead to economic growth.

"Some respondents in our research said their councils already focussed more on town centres, others that the primary focus was on larger businesses," he said.

"The lack of long term and other business-focussed spending on things such as road projects or planning support were other reasons why businesses were critical of their council."

Many business groups are calling for an overhaul of the business rates regime in tomorrow's Budget, or to extend business rate reliefs for small companies beyond 2014.

We'll be covering Budget 2013 throughout the day, from midday tomorrow.