London's councils should be able to keep up to 60% of increased income from business rates according to the Centre for Cities and Future of London.

New research published to coincide with the end of the formal Local Government Resource Review (LGRR) consultation today (Monday, October 24) calls for the boroughs to be given greater freedom and financial incentives to promote economic growth.
 
 The report - Capital Gains: What does the Local Government Resource Review mean for London? – urges bold reform of the finance system   allowing councils to retain between 40% and 60% of future business rates growth to incentivise development and economic growth
 
It also argues that boroughs should pool a portion of future business rates, which could then be allocated for major infrastructure projects, such as Crossrail, that would have city-wide benefits for London's economy. 
 
Joanna Averley, interim chief executive of Centre for Cities said: 'The LGRR will have significant implications for how our local councils are funded because one of the proposals in the review is to allow councils to retain a portion of the growth of future business rates.
 
‘Currently, taxes on businesses are collected and sent to central government for redistribution. This new system creates an incentive for councils to support commercial development.
 
‘Inevitably, some councils will fare better than others, but the research found that in London, almost all authorities would see growth in business rates revenues.
 
‘Pooling is one way to ensure that all councils gain from business rates retention by investing in projects that cross council boundaries and support the needs of London's businesses and communities.
 
‘This is an opportunity to radically alter the finance system to drive growth, but the Government needs to ensure that these incentives are strong, simple and long term to make a difference to London's economic future.'
 
Ben Harrison, chief executive of Future of London said: ‘By allowing   boroughs to retain a portion of the growth of future business rates, authorities will have an added incentive to encourage growth in their area, and greater freedom to invest in the local and London-wide funding priorities required to deliver it.