High streets will be revitalised once local councils are allowed to keep the £26bn raised from business rates, the Chancellor George Osborne has said.
Speaking at the Conservative Party Conference in Manchester yesterday (5th October), Osborne described the move to allow councils to keep the money raised from business rates as “the biggest transfer of power to our local government in living memory,” The Telegraph reported.
Currently, councils raise £26billion from businesses but the money is collected by Whitehall and then redistributed. Osborne said the move would help to regenerate and revitalise local high streets.
“I am embarking on the biggest transfer of power to our local government in living memory, he said. “We’re going to allow local government to keep the rates they collect from business.
“That’s right, all £26billion of business rates will be kept by councils instead of being sent up to Whitehall." He added that the move was a "devolution revolution".
Under the new plans, the government will abolish the Uniform Business Rate and give local authorities the power to cut business rates to boost enterprise and economic activity in their areas. Local areas which successfully promote growth and attract businesses will keep all of the benefit from increased business rate revenues, the department of business said. At the same time, the core grant from Whitehall will be phased out, and local government will take on new responsibilities. Those areas which choose to have city-wide elected mayors will "get even greater flexibilities," and will also be given the power to increase rates for spending on local infrastructure projects, as long as they win the support of local business.
The Booksellers Association c.e.o Tim Godfray said he was "pleased" to hear the Chancellor had announced plans to fundamentally reform the business rates system. However, he said: "Of course, the proof will be in the pudding - or the small print - and we look forward to hearing further details about the government's intentions in the autumn. It is encouraging so far, but the detail is going to be key."
He added: "As we see things, this development doesn't do away with the previous announcement in the Autumn Statement to carry out a 'structural review' of the business rates system. Yesterday's announcement doesn’t conclude the review."
The British Retail Consortium (BRC), which has been campaigning for the business rates system to be reformed, said yesterday's announcement only highlighted the "urgency of reforming this outmoded tax which acts as a drag on the economy."
"We will now look closely at the detail as it emerges but it’s worth remembering that there is a widespread consensus that any package of reform to the system must address head on the need to reduce the burden of a tax that discourages investment in jobs and growth," a spokesperson said.
They added that the national business rates multiplier needed to be frozen and then reduced to encourage local and national growth.
"The detail of the Chancellor’s plan and on-going review is now absolutely essential," the spokesperson said.
Osborne revealed in March that a review of business rates had begun in the UK, which would report back in time for the 2016 budget.
High business rates is a major concern for booksellers and the Booksellers Association has regularly lobbied the government for their fundamental reform.
Last September, 100 firms including Waterstones, WH Smith and Foyles called for the overhaul of the business rates system, calling it a "critical problem."