Latest Public Sector News

16.10.15

Business rates hand-down could spark further devolution of grants

The recent decision to hand down powers over business rates to councils may be followed by further devolution of other similar central government grants, local government minister Marcus Jones MP has said.

Following chancellor George Osborne’s announcement last week that local authorities will be able to keep 100% of their business rates, Jones has said that Whitehall is now looking closely at opportunities to extend this to other central grants.

Other grants handed to councils include cash for the Troubled Families programme, the new homes bonus and funding to freeze council tax.

During his speech at the District Councils’ Network Assembly annual general meeting yesterday (15 October), he said: “With the deficit in mind, this offer must and will be fiscally neutral. While a system of tariffs and top ups will remain, the current revenue support grant will be phased out completely and you will be expected to take additional responsibility: more detail on this will be provided in the Spending Review announcement.

“We have to work together to understand how you can meet that challenge, and we will look closely at opportunities for refocusing other central government grants.

“There will be practical issues to consider, such as how business rates are divided between districts and councils – I can assure you that we will work with you to make sure that this new system is fit for purpose.”

Jones recognised that the business rates reform represented a “historic change” to how councils operate, especially as the uniform business rate – a single tax rate that is imposed on every council by Whitehall – is due to be scrapped entirely.

“For the first time since 1990 you will have the power to reduce business rates across the board to support businesses in your area. You will have even greater opportunity to benefit from growth that you generate. I hope you will seize that opportunity,” he said.

“In the meantime, there is plenty of work to do in this parliament to continue to be more productive and efficient to help balance the budget and ensure the services the public relies on are not undermined.”

He emphasised that smarter working, including by sharing back office services, senior leadership teams and chief executives, must continue to be prioritised – particularly as there are still opportunities to sharpen procurement, tackle fraud, make better use of assets and put more services online.

Jones’ speech also came just a day after the Devolution Bill passed its second reading in the House of Commons, helping accelerate not only business rates retention but a string of other reforms attached to nationwide devolution deals.

(Top image c. Anthony Devlin/PA Images)

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