The Treasury has refused to tell Parliament how much business rates relief JP Morgan could receive on its planned £3bn Canary Wharf headquarters, on the same day the Chancellor raised taxes on banks.
Ministers say the value of the cap on the tax break is covered by confidentiality provisions. Tower Hamlets council modelled the tower’s business rates at £1bn to £1.6bn over 25 years.
In a written answer published on Wednesday, Budget day, the Treasury told the Conservative MP David Simmonds that ‘the financial value of the cap on the business rates relief is covered by confidentiality provisions and is subject to a subsidy control process’.
It added that the cap ‘has been calculated to ensure that the programme delivers value for money for the taxpayer’. Asked when the relief would start, the Treasury said only that a new building becomes liable for business rates when it is practically complete and ready for occupation.
Mr Simmonds was following up an earlier answer, given on 13 October to Sir James Cleverly, who had asked for a copy of the memorandum of understanding with the bank and the gross cost of the relief in each of the next 20 years. That answer said the relief would be subject to a formal subsidy control assessment and that it ‘will be capped’. It gave no figures.
JP Morgan announced the Riverside South tower in November 2025. A Tower Hamlets cabinet paper from March says the £3bn building would house up to 12,000 staff, and that the bank ‘has requested a business rates incentive over a period of years’.
The same paper records that ‘Government has indicated that JP Morgan is unlikely to progress without clarity and certainty on business rates liabilities’. It said an in-principle memorandum between the bank, the Ministry of Housing, Communities and Local Government and the Greater London Authority was expected by March.
The council set out two routes. An Enterprise Zone would allow up to a 100 per cent discount for qualifying occupiers, with business rates growth kept locally for 25 years. Under discretionary relief the cost would be split, with the council bearing 30 per cent, the GLA 37 per cent and central government 33 per cent.
The council’s advisers modelled total business rates income from the site at around £1bn to £1.6bn over 25 years. That is the size of the tax base involved, not the value of the relief. The share to be waived is the figure ministers will not give.
There is a real case for the investment. An independent assessment cited by the council says the project could add about £9.9bn to the economy over six years and create around 7,800 construction jobs, and keeping a global bank’s main UK base in London matters to the City. Enterprise Zones were revived by the Conservative-led coalition in 2011, and governments of both parties have used them to win investment.
The deal has been negotiated under Labour. It was set in train under Sir Keir Starmer and Rachel Reeves, and it is now for Mr Healey’s Treasury to settle the final terms.
In his Budget on Wednesday, Mr Healey told MPs that banks ‘will pay an extra 3% on the Bank Surcharge’, for 15 months from January, to pay for help with energy bills. He also raised the Small Business Rate Relief threshold for shops, pubs, restaurants and gyms from £12,000 to £18,000, saying half of them will now pay no business rates at all.
Smaller firms that remain liable get no confidential deal. Kate Nicholls, chief executive of UKHospitality, has said the incentive did not feel ‘fair or sustainable’, City AM reported.
The Treasury says the cap protects the taxpayer, but it will not tell Parliament what the cap is. The memorandum has not been published, and the Treasury says the cap is still subject to a subsidy control process.
Image: Canary Wharf from Limehouse, June 2016. King of Hearts, via Wikimedia Commons, CC BY-SA 4.0, cropped.
