The decision to allow English councils to keep business rates from their areas, which will trigger competition between areas within England to attract businesses, immediately led to demands from the Convention of Scottish Local Authorities (Cosla) for the SNP government to follow suit.
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“The abolition of the uniform business rate across the country means a reversion to the system that existed before 1990, where local authorities are able to set the tax rate on business property in their area independently”.
Director Ed Cox said: “George Osborne should be applauded for taking the devolution agenda into a new bold frontier by giving local areas new powers over business rates”.
Such cities represent a traditional power base for the opposition Labour Party, but Osborne – who represents a constituency near the northern city of Manchester – has built a closer relationship with them. He added that the move was a “devolution revolution”. “We are keeping business rates arrangements under active review”.
No. A safety net will operate, so that central government steps in to support any council that suffers a collapse of 7.5 per cent or more in its revenue from business rates in a year.
Councils will be freed to cut rates to attract new investment and jobs to their high streets and business parks, and elected mayors in big cities like London, Manchester and Sheffield will be allowed to add a premium – expected to be capped at 2p on top of the multiplier which now stands just under 50p – to pay for major infrastructure projects. Business rates had previously been under review by the government.
Labour-run Slough Borough Council should benefit hugely from the scheme, in theory, due to the large number of businesses in the town thanks to Slough Trading Estate.
His changes mean that councils will keep an increase in business rates in the future – and could lose money if the local economy goes downhill, although there will be safeguards to prevent their incomes falling too much.
He said: “I am embarking on the biggest transfer of power to our local government in living memory”.
He also spoke about creating a budget surplus to use when “the storms come” and stated there would be no cuts to the NHS, pledging that the health service would have “more money than ever before”.
The fourth and final part of the plan is the creation of a new independent National Infrastructure Commission (NIC) that will, according to the chancellor, ‘calmly and dispassionately assess the future infrastructure needs of the country’.
“Labour are the wreckers, we are the builders”, Mr Osborne said.
Mike Burke, owner of Embrace Bar on Stamford New Road, said: “In principle I think it’s a good idea for the local council to set it, because they’re locally responsible then”.
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“To these working people who have been completely abandoned by a party heading off to the fringes of the left let us all here today extend our hand”, he said.
