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Councils to be Allowed to Keep Business Rates

by nicolaturner on 5 July, 2011

Localising Business Rates has real potential to boost local enterprise and protect land from housing development

 In a speech to the Local Government Association, the Liberal Democrat Leader and Deputy Prime Minister, Nick Clegg, announced that councils in England will be allowed to keep the business rates that they collect rather than paying them into a central pot under new government plans. 

 Business rates are charged on most non-domestic premises, including warehouses shops, offices, pubs and factories. They are calculated and collected by local authorities and at present are put into a central pool before being redistributed to all councils in the form of a grant. The grant is used to help fund local services like the police and fire brigade.

 Commenting on the announcement, Cllr Nicola Turner, Liberal Democrat Shadow Cabinet Member for Investment and Housing said:

 “This is another longstanding Liberal Democrat policy which we are now delivering while in Government.”

 “Allowing local councils, like Kirklees, one of the biggest manufacturing districts in the UK, to keep the money it generates from business rates has real, exciting potential for our area. 

 “It will create a massive incentive for the council to look to attract new businesses and generate new business opportunities for the area, which in turn would bring in new jobs and increased prosperity for local people.” 

 “The more business rates we can collect the better and more secure the public services we can provide.”

 “It could also encourage councils to reserve land for the purpose of business rather than selling it off to housing developers for a short term gain.  It makes that land have an increased value in terms of what it could yield for the authority over a long period of time should it become a site used by a successful business.”

Councils will also have the power to borrow against business rate income to fund local development.

In his speech to the LGA on Tuesday, the body’s new chairman, Sir Merrick Cockell, said localising business rates would be “the biggest kick-start to our economies” that the government could give.

Under the proposed changes, there is a guarantee that no council would be left worse off than under the current system.

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