Rural councils, as well as their urban counterparts, can benefit from next year’s changes to business rates. They need to play a unifying role – bringing local firms, academics, politicians and communities together
From April, local authorities will be allowed to keep part of the revenue generated through business rates. Supporters say the move will revolutionise council finances and create a real incentive for local authorities to drive growth in their region.
The critics, however, fear that these finance changes will have the opposite effect and create a two-tier Britain, in which urban councils gain a funding boost, while rural authorities face making yet more service cuts as they try to balance the books.
While it is certainly true that the finance changes offer more immediate benefits to urban councils with large business footprints, rural local authorities could also reap large benefits if they look strategically at the assets that make them attractive to business.
Those assets don’t just have to be a concentration of other businesses, people and raw materials. They can also be space, quality of life, academic institutions and infrastructure. Partnering with businesses and other organisations can help local authorities build a case for firms to locate in their area, whether rural or urban.
Local authorities have a key role to play in driving economic growth. They are often better placed to do this than government because they have a clear understanding of the infrastructure improvements, educational facilities and professional networks that can drive local growth.
Investing in a new road network, using planning rules to identify suitable areas for a business park or providing funding to help rejuvenate a run-down shopping district and improve transport infrastructure around it, are all things councils can do. Such initiatives can have a significant growth footprint.
But councils can do more; they can play a unifying role, bringing business, academics, politicians and communities together to find new ways to address local issues. The business rate changes provide an opportunity to do this.
Businesses, universities and councils will all need to work closely to drive economic growth and development in the UK. There is huge potential here as this triumvirate has the knowledge, motivation and finance to drive economic growth. Also, ensuring these groups work together via Local Enterprise Partnerships is crucial if councils are to encourage business investment in their area, and reap the revenue benefits of higher business rates that result.
As a driver for growth, local authorities should focus on opening up the ‘knowledge economy’ that exists around universities to help build commercial success based on university funding and research, closing the gap between academia and business, providing jobs and supply-chain networks across regional areas in the UK. Given the broad geographical reach of universities, this could also help address inequalities in business rate funding that some fear is likely to emerge as a result of the local authority finance review.
All local authorities need to recognise local businesses as a huge asset but also see the role they play and the knowledge they possess as an invaluable asset to help businesses locate to their regions.
While many businesses will continue to choose to invest in urban heartlands, many more will actively choose not to. Working with business to identify the drivers that make a specific district attractive and the infrastructure improvements that would tip the investment decision is crucial if councils are to genuinely benefit from the business rate change.
Finding the right solutions requires a meeting of minds and collaboration between the different business, community, academic and council interests for transformational impact. Driving this collaboration is what local authorities do best.
Greg Michael is group strategy and business development director at May Gurney