The government’s decision to allow local councils to keep their own business rates will provide a “massive boost” to Bristol’s economy, the director of policy at Business West has said.
Local Government Secretary Eric Pickles announced proposal yesterday that will 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.
Mr Pickles said the proposals will fundamentally shift councils away from their dependence on Government grant.
“Our proposals to repatriate business rate income are balanced, fair and equitable creating self-sufficiency, the right incentives for all areas to grow and protecting the most vulnerable places,” he said. “This is what councils want and precisely what we mean by localism.
“It will be much more straightforward, by letting councils keep the products of enterprise we will end their disparaging dependence on government handouts, finally start rewarding economic growth and support local firms and new jobs.”
The move has been welcomed by Business West, whose director of policy said: “Britain’s local government finance system is one of the most centralised in the world which means councils have little or no financial incentive to promote business growth. This recent announcement provides a massive boost to the business community which has long argued for local retention of business rate revenue.
“We welcome the government’s plans to change the current system to allow councils to retain any growth in business rates thus creating a strong incentive to promote local growth. Local retention will link council funding to the success of the local business community so that the more an area grows its business rates base, the better off it will become.
“These plans have the potential to really drive economic development at a crucial time for the local economy.”
Commenting on the situation in Bristol, James Durie – director of Bristol Initiative and Chamber – said: “Bristol and the West of England in particular could benefit significantly from these proposals. If you look at the recent report by the Centre for Cities it shows that if Bristol had been allowed to retain growth in business rates it would have been £81m better off between 1999 and 2010.
“A system that allows local councils to retain a proportion of the growth in business rates is a good starting point but we believe needs to be agreed indefinitely – shorter term measures will not work to build and sustain impact and business confidence.”