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Business rates decision 'creates further uncertainty'

Although there has been a widespread if cautious welcome for yesterday's announcement by chancellor George Osborne that councils are to retain the business rates they collect and have more flexibility to lower their rates, there is concern it could "just be another hit on council budgets" and foster more uncertainty.

Leader of Leeds City Council, Cllr Judith Blake, said: “We know there are more major cuts to come to local authority budgets in the comprehensive spending review, so this change will need to be put in the context of the incredibly difficult financial position local authorities are in as they look to continue providing essential services. 

"This change creates further uncertainty in terms of financial planning, and there’s also a concern that if the Revenue Support Grant is phased out quicker than the income from business rates grows, that will just be another hit on council budgets. Another outcome which needs to be avoided with this change is that it benefits better-off areas and only serves to widen the north-south economic divide.”

Jonathan Carr-West, chief executive of the Local Government Information Unit (LGiU) think tank, said: "We don’t want to leave councils out in the cold because of uncertainty. This process will need to be managed in a way that is fair and that gives local authorities and local people the maximum possible control over the economic destiny of their areas.

"The key question here is not how much money will these measures raise but will it be enough to cover any new responsibilities. As such, we look forward to seeing the detail of the Chancellor’s plan in the Autumn Spending Review in November.”

Darren Johnson AM, chair of the London Assembly Devolution Working Group, said: “Devolving business rates to the Mayor was a key recommendation in our cross-party report, A New Agreement for London, so this is a welcome step. However, we will need to see more detail – in particular, robust scrutiny of the process must be in place with the right checks and balances, to ensure this money is spent wisely.”