The Chancellor George Osborne announced a major overhaul of the business rate system in Manchester today.
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John Cridland, director general of the CBI, said: “If this bold announcement on business rates is a way to cut them, then it will spur councils to take a pro-growth approach, and has the CBI’s support”.
The move, which will replace a system under which councils pay business rates into central government and receive a grant to cover local services in return, forms part of Osborne’s plan to devolve power to town halls after decades of centralization.
In his speech to activists at his party’s conference in Manchester, he said the Conservatives were “the builders”. The way this country is run is broken.
He said that allowing them to share leave with their children will keep thousands more in the workplace.
“Our cities held back”.
He went on: “So this is what our plan means”.
Mr Osborne said: “It’s time to face facts”. They will be accountable for their choices and whether their choices result in more or fewer windows on their high streets being boarded up.
The chancellor said: “Any local area will be able to cut business rates as much as they like to win new jobs and generate wealth, it’s up to them to judge whether they can afford it – it’s called having power and taking responsibility”.
“Let the devolution revolution begin”.
Councils and businesses both agree that business rates should be a local tax set by local areas.
Power over £26 billion of revenue from business rates will be devolved. “There’s a building not too far from here which reminds us of what local government used to mean”, Osborne added. “More than 60% of IoD members back local politicians being given the power to set business rates”.
“Businesses are excited about the prospects for devolution, and the promise to devolve business rates will give local authorities a greater stake in the success of their local economy”.
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“Businesses have been clear that they want enterprise to be put at the heart of the devolution agenda, and the Chancellor appears to be doing just that. But this must not be a way to increase rates without the consent of the local business community”. Rates are charged regardless of whether a business is profitable or not, unlike corporation tax. Many firms are still struggling to come to terms with it. Adding a nominated grandparent to the entitlement increases the management burden by half and could see three employers involved in managing leave for each infant.
