Business rates overhaul: George Osborne to give local councils power to cut rates

Osborne announces largest power transfer to councils “in living memory”

Chancellor George Osborne has announced that the government will hand the thorny issue of business rates to local councils. Under Tory proposals, councils will have the power to reduce the rates, which have long been a bugbear of businesses across the country.

Under the new rules councils will also be able to pocket the revenues they make, though they will not be able to raise rates above a nationally agreed threshold.

Osborne announced the significant changes at the Conservative Party Conference which is underway in Manchester, and described the move as the biggest transfer of power to councils “in living memory”.

“Any local area will be able to cut business rates as much as they like,” Osborne said. “It is up to them to judge whether they can afford it.”

Currently, business rates provide the Treasury with £26bn a year. Councils implement the taxes, then hand the majority of it to the government. A significant proportion is then handed back, known as the local government grant.

Osborne’s proposals mean councils will keep 100% of the money raised from business rates. In addition, cities with elected mayors will be able to add a top-up tax to help pay for significant infrastructure projects.

“We are going to allow local government to keep the rates they collect from business,” Osborne said.

“All £26bn of business rates will be kept by councils instead of being sent up to Whitehall. 

“An end to the uniform business rate. Money raised locally, spent locally. Every council able to cut business taxes.”

Channelling hapless social revolutionary Wolfie Smith, Osborne added: “Power to the people. Let the devolution revolution begin.”

Now read

Readers' comments (3)

  • Ian Middleton

    Councils have had the right the reduce rates for years under section Section 69 of the Localism Act 2011

    That was not the focus of the announcement yesterday, it was the retention of the money collected which no doubt will go hand in hand with the local government grant being reduced and probably removed.

    Unsuitable or offensive? Report this comment

  • Agree Ian, you can bet your bottom dollar that central government won't lose out in this, but it absolves them of any responsibility centrally where things go wrong. Just shifting a smaller pot of money into different places really, without solving the real problems which will arise from lower social spending.

    Unsuitable or offensive? Report this comment

  • Ian Middleton

    As always this government uses the 'localism' mantra to shift national problems which they have largely caused to local authorities who have very little scope to make any impact on them now, especially as they have been undermined by government cuts for years.

    Unsuitable or offensive? Report this comment

Social Bookmarks