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Budget 2015: Government to review business rates for councils

The government is to conduct a broad review of business rates, with some areas to retain 100% of any additional business rate growth beyond expected forecasts, the chancellor has stated. 

During his final Budget before the general election, George Osborne announced pilot schemes in Cambridgeshire and Peterborough and, subject to the formal approval of Greater Manchester Combined Authority, in Greater Manchester and Cheshire East, which will enable these areas to retain 100% of any additional business rate growth beyond expected forecasts. 

These pilots will begin next month, but Osborne did not rule out extending this further. 

He said: “I can announce today that we have now reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the Northern Powerhouse. 

“For where cities grow their economies through local initiatives, let me be clear: we will support and reward them. 

“We will also offer the same business rates deal to Cambridge and the surrounding councils, and my door is open to other areas too.” 

However, responding to the plans, Labour leader Ed Miliband asked the chancellor why this could not be extended to all councils. 

Cllr David Sparks, chair of the LGA, said: “Councils are keen to see an overhaul of business rates, which removes the obstacles that prevent us from supporting high street shops, small firms and new start-ups as much as we would like to. 

“This review should be used as an opportunity to create a system which is fit for the 21st century and gives local areas the freedom and finance to invest in the infrastructure and services which businesses rely upon.” 

He added that with high streets struggling and retail increasingly moving online, it will also be important that the impact of e-commerce is taken into account as part of this review. 

“Government must now work with us to make this a truly local tax where the money which a business pays is retained by local government to invest in vital local services, all of which help local businesses either directly or indirectly,” said Cllr Sparks. 

Also in the Budget, the chancellor announced that the government has agreed a new devolution deal with the West Yorkshire Combined Authority that sees the Combined Authority take further responsibility over skills, transport, employment, housing and business support. However, this has already been branded “disappointing”. 

Transport for the North, which was established in late 2014, will shortly publish an interim report, committing to build on the concept of HS3 to develop a network of high quality rail connections across the north – the TransNorth vision; bring the benefits of HS2 to the north sooner than planned; and work towards a single smart and integrated ticketing system across the region. 

The government will also proceed with electrification of the Selby to Hull line, subject to an acceptable contribution from Hull Trains and a business case, to complete the full electrification of the historic trade route between Liverpool and Hull. 

Unveiled in the National Infrastructure 2014 document, a pilot programme on a government-owned former RAF base in Northstowe, near Cambridge, will see the Homes and Communities Agency leading the development of 10,000 homes. 

Osborne said the government is committing to enable the public sector to lead development on the next phases of Northstowe. Under the delivery model set out at Autumn Statement 2014, the government expects that three-quarters of the homes started on the public sector-owned site by 2020 will be built under direct contract with the public sector, with the rest in that period delivered through serviced plots in line with the public sector’s overall master plan for the development. 

On top of this, the University of York is to lead a study into the feasibility and economic impacts of direct commissioning of housing on a significantly wider scale, and to evaluate the development at Northstowe. 

There was also an announcement for a first time buyer ISA. Osborne said: “We do it to tackle two of the biggest challenges facing first time buyers – the low interest rates when you build up your savings, and the high deposits required by the banks. 

“The Help to Buy ISA for first time buyers works like this. For every £200 you save for your deposit, the Government will top it up with £50 more. It’s as simple as this – we’ll work hand in hand to help you buy your first home.” 

(Image: c. PA Images)

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