London’s boroughs have welcomed coalition proposals to allow councils to keep some or all of the business rates collected in their area.
At present councils collect business rates on behalf of the Government which then redistributes them as part of the general central funding of local authorities.
The Government proposes to allow councils to keep some or all of the money which they could then use to finance services which are responsive to local needs.
Ministers say the plans would give councils incentives to grant planning permission for business developments in their areas and lessen their reliance on central Government grants.
Local Government Secretary Eric Pickles said: “by letting councils keep the products of enterprise we will end their disparaging dependence on government handouts, finally start rewarding economic growth and support local firms and new jobs.”
“This is what councils want and precisely what we mean by localism.”
Under the proposals the Government would continue to set the business rate level.
To ensure boroughs with very high levels of businesses do not enjoy “disproportionate” gains, the Government would reclaim some money from them which it would use to ‘top up’ funding for boroughs whcih suffer the closure of a major employer.
The changes have been welcomed by London Councils, the cross-party body which represents all local authorities in the capital.
Chair Mayor Jules Pipe said: “Business rate retention, done right and done fairly, will be good for local councils, good for business and good for London.”
Pipe said London’s councils wanted Ministers to go further in their localism drive and allow them to develop a London-specific system which ensures all boroughs have the resources to deliver services for residents.
In a letter to Mr Pickles, Mayor Pipe says his members: “believe that incentives for growth will be stronger and the protection against unforeseen risks will be greater if London is allowed to operate a London wide system that offers both individual borough incentives and pan-London collection incentives.”
London Councils recently published proposals for a London scheme which is available on their website.