London Councils has published the first detailed model for how the capital's boroughs could pool business rates in a way that encouraged economic growth while protecting vital frontline services.
The model takes into account ‘asymmetric growth' – whereby some boroughs with vibrant economic potential, such as Westminster, could see funding derived from business rates increase by around 10% more than deprived areas, such as Hackney. Under the three-part arrangement involving a reward retention element and primary and secondary pools, the process for distributing £5.5bn rates collected annually in the capital would be simplified and made flexible, the policy body claims.
