Plans for councils to set their own business rates could be good for local democracy and give business a greater say in Town Hall decision-making, according to Birmingham Chamber of Commerce and Industry.
An interim report by Sir Michael Lyons into local government funding is due to be published today and is expected to recommend handing back some responsibility for setting business rates to local authorities.
And the chamber is tentatively in favour - so long as there is no return to the bad old days.
Charlotte Ritchie, BCI policy executive, said: "The relocalisation of business rates may be acceptable if the money was hypothecated to clearly defined projects to help develop the city region and the priorities of the business community, such as local transport or skills delivery.
"There must clearly be stringent safeguards to limit increases and ensure business rates are not used as a mechanism to ease the strain on the council tax. With greater accountability over the revenue from business rates, local authorities could be persuaded to enhance the business support services they offer and encourage greater economic development and regeneration." She went on: "There are strong arguments for shifting the balance of funding to the local level.
"Currently, central government controls up to 80 per cent of local authority expenditure, leaving little room for local accountability in how funds are spent. The system of setting business rates centrally does offer accountability and national scrutiny, but the contribution of business rates to local revenue only accounts for 20 per cent and this leaves little incentive for local authorities to provide quality business services, or take b usiness interests into account.
"Excessive central government control of local authority spending levels and ring-fencing of income for specific purposes damages the capacity for councils to act autonomously and also limits their role of scrutinising the power of central government.
"If taxation decisions were taken at the local level, local authorities could be more flexible and accountable for the decisions they take. If they had more power to make spending decisions they could then take the consequences for these decisions at election time. There are obvious concerns for business, given the large annual increases in business rates when they were set locally prior to 1990. This had a serious impact on business profitability and competitiveness and we must not return to these days.
"But local authorities need an incentive to engage with business and business needs the motivation to become more involved in civic life, which would have huge benefits for Birmingham and the region. Local financial flexibility in defining local priorities will also be key to attracting investment to the city."
She said the Broad Street Business Improvement District (BID) w as a good example of business-led partnerships working with local authorities to deliver significant improvements, such as cleaner, more attractive spaces, greater security and improved transport links. Although it was still relatively early days for the BID, it looked set to deliver - all funded by an agreed levy on the business rate.
Ms Ritchie added: "Crucially, if rates are relocalised, either partially or fully, businesses must have some influence over how the money is spent."