In his speech at the Conservative Party Conference in Manchester yesterday (5th October), Chancellor George Osborne announced that by the end of the Parliament, local government will be able to retain 100 per cent of local taxes – including all £26 billion of revenue from business rates – to spend on local government services.
The government will also abolish the Uniform Business Rate and give local authorities the power to cut business rates to boost enterprise and economic activity in their areas. Local areas which successfully promote growth and attract businesses will keep all of the benefit from increased business rate revenues.
Those areas which choose to have city-wide elected mayors will get even greater flexibilities, also being given the power to increase rates for spending on local infrastructure projects, as long as they win the support of local business.
Commenting on the Chancellor’s announcement on business rates, Phil Smith, Managing Director of Business West, said:
“The Chancellor surprised many by announcing that by the end of this Parliament, local government will be able to retain 100 per cent of local taxes – including all £26 billion of revenue from business rates – to spend locally.
“Here in the South West we are constantly hearing cries of the impact of a broken business rate system. So it is odd for the Chancellor to announce major changes to business rates without consulting with the business community that ultimately foots the bill.
“Greater control of business rates could give local authorities more incentives to cultivate local business growth and invest in local economic improvements. However when surveyed our members voice strong scepticism that local authorities have the track record or capabilities to deliver and there is a real concern about a lack of accountability of many town halls in listening to local businesses and getting the basics right.
“The detail of the Chancellor’s plan is critically important. Businesses will want assurances that greater local control over business rates does not translate to more taxes with little or no business benefit.”
Pictured above: Phil Smith, managing director of Business West