William Eichler 25 November 2015

Spending Review: Local authorities to retain 100% of business rates

Spending Review: Local authorities to retain 100% of business rates image

Local authorities will be able to retain 100% of their business rates, the chancellor announced in today's Spending Review.

George Osborne has reaffirmed his commitment to allow councils to keep all of the money raised through taxing local businesses operating in their areas. Nationally, this adds up to an estimated £26bn.

Local authorities will also, according to the Chancellor, be able to lower business rates in order to attract business investment.

Directly elected mayors too will have new fiscal powers. They will be able to raise rates on the condition that they use the revenue to invest in local infrastructure.

Central government grants will also be phased out.

Historically, local authorities paid all revenue raised through business taxes to the Exchequer. It would then be redistributed on a needs-basis according to the Formula Grant System.

This changed on 1 April 2013 when the Government allowed local authorities to retain 50% of business rates, while the remainder went to Whitehall.

Finally, in October 2015 the Chancellor announced that councils would be allowed to keep hold of 100% of the revenue derived from local businesses.

Today's announcement to 'abolish uniform business rates', as he said in the Spending Review, is an integral part of the Chancellor's 'devolution revolution', an attempt to correct what he characterised as the 'geographical imbalance' in the UK.

By devolving the responsibility for business rates to councils, the Chancellor hopes to encourage local authorities to become more competitive and to focus their attentions on attracting private investment into their own areas.

Reacting to the Chancellor's October announcement, Cllr Gary Porter, chairman of the Local Government Association (LGA) said: 'Councils and businesses both agree that business rates should be a local tax set by local areas. It is right that all of the money which a business pays is retained by local government and this will be a vital boost to investment in infrastructure and public services.'

For your free daily news bulletin
Highways jobs

Trainee Craft Employee x6

Sandwell Metropolitan Borough Council
£18,795 - £19,945 per annum
Seeking to recruit several Trainee Carpenters within the Asset Management and Maintenance Service. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Social Worker - Family Support & Protection

Essex County Council
£26001.0 - £30000.0 per annum
Please note this role is based in Clacton and is open to Newly Qualified Social Workers (NQSWs). The starting salary for NQSWs is £27,775 per annum an England, Essex, Clacton-On-Sea
Recuriter: Essex County Council

Corporate Director of Neighbourhoods and Climate Change

Durham County Council
You will manage a range of front-line services including bins and waste, transport, environmental health, technical services, partnerships and... Durham (County)
Recuriter: Durham County Council

Corporate Director of Regeneration, Economy and Growth

Durham County Council
Seeking candidates who are adept at building relationships, able to work successfully with regional and national partners... Durham (County)
Recuriter: Durham County Council

Tenancy Enforcement Assistant

Royal Borough of Greenwich
£22.377 - £23.607
Looking for individuals who have an interest in the environment with good customer service skills, flexible approach to work and a good team player. Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

Local Government News

Latest issue - Local Goverrnemnt News

This issue of Local Government News explores how councils can tackle modern slavery and trafficking in their supply chains, finds out more about Cambridge's first cohousing scheme and the launch of a new project to build a shared service pattern library for local government.

This issue also contains a special focus on children's services and how councils are protecting children following local safeguarding children boards being abolished.

Register for your free magazine