Plans for local government to gain new powers and retain local taxes set out by George Osborne
On 5 October the Chancellor set out plans to devolve new powers from Whitehall to local areas to promote growth and prosperity by attracting business and creating jobs. Local government will be able to retain 100% of local taxes by 2020 to spend on local government services, including £26 billion of revenue from business rates. This means local government retains all revenue from business rates for the first time since 1990, having been enabled to retain 50% of the proceeds since 2013.
Uniform Business Rate abolished
The national Uniform Business Rate, which has been collected locally and transferred to central government to be distributed back to local areas as a grant, will be abolished. This will allow local authorities to cut business rates as much as they like to boost enterprise and economic activity. The core grant from Whitehall will be phased out and local government will take on new responsibilities to ensure the reforms are fiscally neutral. Details of the local government’s contribution to fiscal consolidation will be set out in the Spending Review.
Business rates supplement
Areas that choose to have city-wide elected mayors 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. This power will be limited by a cap, likely of 2p on the rate. The Greater London Authority is levying a business rate supplement of £0.02 is on all properties with a rateable value of more than £55,000, in relation to its contribution to the Crossrail project.
Rating multiplier
For 2015/16, the Government has set two multipliers: the Small Business Non-Domestic Rate Multiplier of 0.480 and the National Non-Domestic Rate Multiplier of 0.493. The City’s multipliers have been set at 0.484 (48.4p in the £) for small businesses and 0.497 (49.7p in the £) for other businesses. These are comprised of the multipliers set by the Government and a premium of 0.004 levied to provide additional funding for the Police Service, security, resilience and contingency planning in the City.
