Business rates retention proposals published

Author: James Illman, LGC - Aug 22, 2011

Documents addressing a raft of thorny issues surrounding councils retaining their business rates have been published.

The Department for Communities & Local Government has unveiled eight technical papers which senior council figures hope will clarify the implications of a localised business rates system for local government.

The papers seek to address the demanding challenges in re-localising around £19bn worth of business rates, such as how to protect areas less able to boost their rates revenue and how much reward to offer those who increase their local rates.

As exclusively revealed by LGC in May, the new model will be based on a system of so-called ‘tariffs or top ups’.

Councils will either be classed as in ‘deficit’ or in ‘surplus’ for the first year of the new scheme, according to whether they raise more in rates than they spend.

A ‘tariff’ will be collected from those that generate a surplus and a ‘top-up’ paid to those that have a deficit.

Ministers said this would “ensure a fair starting point for all councils - north or south, metropolitan or district”.

Communities secretary Eric Pickles said: “Councils deserve to see their business rate income repatriated in a balanced, fair and equitable way. Our changes will mean they can strive for self-sufficiency and have their own means to support local jobs, growth and protect the most vulnerable places.

“The new business rates system will be much more transparent and today we are setting out more of the detail of our proposals so councils all across the country can see the potential impacts and how they could benefit.

“The top up and tariff measures will safeguard those places that have relied on government grant by making sure those areas with more business rate income than they need share a slice of that income. Every area will be rewarded for supporting local firms and growth. This is what councils want and precisely what we mean by localism.”

The sensitive issues have already sparked a row between different sections of the local government community

Following publication of a broad brush consultation paper in July, London boroughs said the level of protection on offer for poorer areas meant there would be an insufficient incentive for councils to grow their local economies.

In contrast, the Special Interest Group of Municipal Authorities said thee consultation had actually heightened its fears about a poor deal for deprived areas.

Click here to read the technical papers

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