PLANS announced today to allow councils to keep proceeds gathered from business rates in the ‘biggest transfer of power to local government in living memory’ have been welcomed.
Chancellor George Osborne told delegates at the Conservative Party conference all £26 billion of business rates collected would be retained locally by 2020, instead of being sent up to Whitehall.
Local authorities will be free to reduce rates if they can afford it.
Worthing town centre manager Sharon Clarke said: “The first reaction to this is positive as it could potentially give local councillors the opportunity to attract new businesses to the area by offering competitive business rates.
“It will also be good for business as their success will become more important for councils, thus ensuring the impact on businesses is a priority within local authority decision making.”
Mr Osborne said the plans would stop the ‘merry-go-round’ of the locally-collected tax being handed out in the form of a grant.
Devolved areas, with elected mayors, would be able to raise the rates by a limited rate.
“In my view proud cities and counties should not be forced to come to government with a begging bowl,” he said.
“Today I am embarking on the biggest transfer of power to local government in living memory. We are going to allow local government to keep the rates they collect from business. That’s right, all £26 billion of business rates will be kept by councils instead of being sent up to Whitehall.”
Liberal Democrat Beach ward councillor Dr James Walsh said he cautiously welcomed the announcement but would ‘want to see the small print’.
He said: “In principle it sounds like a splendid idea but we have to be reassured that the chancellor is not going to reduce the central government grant to local government. There could be sleight of hand involved that gives us business rates but reduces council tax support by more than we receive.”
A statement released by the Local Government Association (LGA) said it was ‘great news’ and showed the Government had listened to calls for business rates reform.
LGA chairman Gary Porter said: “Councils and businesses both agree that business rates should be a local tax set by local areas. It is right that all of the money which a business pays is retained by local government and this will be a vital boost to investment in infrastructure and public services.
“While this is good news for councils and businesses, local authorities will face almost £10 billion of cost pressures by 2020 so we will now seek to work with the Government about how this proposal can be introduced more quickly.”