Business rates devolution, £26bn in devolved funding

Business rates devolution, we await the detail.

The Chancellor of the Exchequer has just announced one of the most fundamental reforms to the way in which Local Government is financed in the last three decades,
through the devolution of the Business Rates to Local Authorities.

George Osborne has announced that local authorities will now retain the entire £26bn worth of Business Rates income raised across the country, as well as the abolition of the Local Government grant,
and the Uniform Business Rate. This will give local authorities the power to cut Business Rates.

Big cities with Mayors, including London, Manchester and, shortly, Sheffield, will have the power to add a premium of 2p onto Business Rates to pay for new infrastructure projects,
subject to approval by business members of Local Enterprise Partnerships.

Jennifer Brooke, Executive Director of the Business Centre Association, said:

“We await to see the details of the reforms announced by the Chancellor in his Conference speech today.

The implementation of this policy will have to be extremely carefully managed in order to avoid entrenching inequality and inconsistency within the Business Rates system across the country.

The Government needs to clarify whether councils without Mayor’s will have the ability to place a premium on Business Rates to pay for infrastructure projects,
and how the interaction between Local Authorities and business members of local LEPs will work, when decisions are made to use this power.

Whilst this policy may seem attractive on the surface, the devil will be in the detail and the Government must ensure it gets the detail right before pushing forward with this plan.”

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