Councils will get to keep their own business rates under new local government financing proposals that will benefit those that grow financially, Local Government Secretary Eric Pickles announced last week.
The Government has published proposals to allow the local retention of business rates by councils and to let them borrow against future rate income. Legislation will be set out later this year so changes start as soon as possible.
The consultation is the outcome of a review into local government funding that sought to repatriate rates; create a financial incentive for councils to promote local growth; reduce dependency upon central Government grant; and maintain protections for business and vulnerable areas.
The proposals will fundamentally shift councils away from their dependence on Government grant, where pleas of poverty earned a bigger share. Any council that grows it's business base would see increased business rates that they would keep. Importantly, there will be no change to the way business pays the tax, who is eligible for discount, or the way it is set nationally.
Commenting on yesterday’s announcement, director of GWE The Initiative, Ian Larrard said: “Businesses in Swindon and Wiltshire will welcome the government’s plans to allow councils to retain business rates. Local retention will link council funding to the success of the local business community. That means councils will pay ever closer attention to the requirements of their local businesses and in ensuring they are able to flourish.
“Retaining business rate revenues will promote a pro-growth and pro-business attitude among councils. Alongside Tax Increment Financing, which will allow councils to borrow against future revenues to finance infrastructure projects, these plans have the potential to really drive economic development at a crucial time for our local economy.”
