Bill proposes giving town halls powers to raise funds for infrastructure from local businesses

Crossrail was given a boost today as details were published of a measure to increase funding for local infrastructure schemes.

The Business Rates Supplements Bill, to be introduced in the next session of parliament, would give town halls powers to raise local supplements of up to 2p in the pound above the national business rate.

Proposed Crossrail station at Canary Wharf
Proposed Crossrail station at Canary Wharf

The measure is intended to help pay for schemes such as London’s £16bn rail project Crossrail, which will stretch from Maidenhead and Heathrow in the west to Shenfield in the east..

Its announcement coincides with the Queen’s speech, though it was not mentioned in the speech itself.

The power will apply to "top tier" councils, namely county councils and unitary authorities outside London, and can only be used to tax businesses whose rateable property value is worth more than £50,000.

The British Property Federation welcomed the news but warned that funding for business improved districts – PPP schemes where local businesses choose to pay an extra levy to fund local improvements – could suffer as a result.

The Federation of Small Businesses slammed the decision, saying it was out of step with the times. “The Business Rates Supplements Bill is a bill that is not of its time for a struggling economy in 2009,” it said.

John Cridland, director general of the Confederation of British Industry added: “Additional funding is needed for big infrastructure projects, especially Crossrail, but now is not the time to bring in new powers to raise tax more widely from business.

“The CBI wants, at the very least, for firms to be able to vote on every proposed local business rates supplement, so firms aren’t saddled with a potential £1bn annual tax increase without a proper say in the process.”