MPs have given the green light to plans for councils to be given powers to levy a supplementary business rate to help fund local infrastructure and transport projects.

Members of the Communities and Local Government select committee said local authorities should be able to vary local business rates to fund specific projects which have economic and environmental benefits. I

n their report, Local government finance: Supplementary business rate, MPs suggest councils and businesses should be free to determine their own investment priorities. They also stress the need to consult with local businesses before any rates increase, and recommend a compulsory ballot if the business rates are to vary by more than 10%.

Dr Phyllis Starkey, chair of the committee said: ‘Supplementary business rates could offer local areas a means of investing in themselves, in their futures and in their economic development.’ The report cites evidence from the City of York that the extra revenue could be used to introduce additional park-and-ride services that would protect the character of its historic town centre while encouraging shopping, and help local businesses.

MPs also endorse Leeds City Council’s observation that money raised ‘could be a significant element of a larger and more complex funding package’, such as using the additional revenue for infrastructure investment linked to economic regeneration and the development of Leeds and Bradford Airport.

Cllr Mark Harris, Leeds council leader, said if the city was allowed to keep the full amount of business rates raised locally it would be able to fund the Supertram system, but a supplementary rate would only raise one-third of the finance needed. ‘What is attractive about this (SRB) scheme is that it does allow us to keep money that is raised locally and spend it on local priorities. It is a limited step forward but councils should benefit from the full amount of their business rates,’ he told Surveyor.

Local government finance: Supplementary business rate : http://www.publications.parliament.uk/pa/cm/cmcomloc.htm