Osborne vowed to spark a “devolution revolution” by allowing local governments to keep the rates they collect from businesses.
Instead he said they would keep what they raise to invest in jobs and growth.
No. A safety net will operate, so that central government steps in to support any council that suffers a collapse of 7.5 per cent or more in its revenue from business rates in a year.
But Labour warned the change would start a “race to the bottom” with councils competing to cut their rates the most.
City leaders say the region could lose out following Chancellor George Osborne’s announcement of the “biggest transfer of power to local government in living memory”.
Westminster City Council – population 227,000 – collects nearly £2bn-a-year in business rates, more than Birmingham, Manchester, Sheffield, Liverpool and Bristol combined, he added. We’re going to abolish the uniform business rate entirely.
The chancellor said he was committed to his so-called “Northern Powerhouse” plan, which, among other things, will see powers devolved to a Greater Manchester authority in return for a directly elected mayor. Under Tory proposals, councils will have the power to reduce the rates, which have always been a bugbear of businesses across the country.
Meanwhile, John Cridland, director-general, of the Confederation of British Industry (CBI), the UK’s biggest business lobby group, said the “devil would be in the detail”.
Can councils vary the business rate?
And Mr Osborne added: “So this is what our plan means – attract a business, and you attract more money”.
The current business rates system dates back over 400 years, and they are calculated according to to the rental value of the property used by a company. Regenerate a high street, and you’ll reap the benefits. Councils can support them by ensuring competitive business rates for work hubs and shared workspaces.
“The problem is at the moment is that the money that comes back to the city does not get spent on business issues, it goes to fill the black hole in social care”. Infrastructure must be planned for the long term and the pressing need for an independent body, as a mechanism to build political consensus, has been recognised.
The Chancellor will also use his first conference speech since the election to announce plans to pool local authority pension funds with the goal of boosting investment in infrastructure.