The Leader of Cheshire East Council has warmly welcomed the Chancellor’s announcement that Councils will be able to keep more of their business rates.
Councillor Michael Jones said the announcement was ‘excellent news’ for business-friendly councils like Cheshire East and will boost revenues to invest locally.
Local authorities in England will be able to keep the proceeds from business rates raised in their area under plans unveiled by Tatton MP George Osborne at the Conservative Party conference in Manchester yesterday (Monday).
Councils will also be able to cut the rate and some will be able to raise it. Mr Osborne said councils would hold on to £26bn, calling it the ‘biggest transfer of power’ in recent history.
They currently keep up to 50 per cent of the rates with the rest going to Westminster.
The Local Government Association said the move was ‘good news’.
Councillor Michael Jones, Cheshire East Council Leader, said: “This is excellent news and something we have been seeking for some time.
“It means pro-business councils like Cheshire East get to keep more of the business rates that they generate locally – and work hard to attract – and invest it in our local communities. It will be a virtuous circle and we can only gain from this arrangement.
“Cheshire East Council has the largest number of small and medium sized businesses in the North West and contributes significantly as one of the economic powerhouses of the north and for the UK.
“This authority has created the right conditions to attract private sector investment, jobs, growth and business confidence. This announcement will help us to build on this success and invest even more into the local economy and continue to put our residents first.
“We have been delighted to be at the forefront of the Chancellor’s pilot scheme to encourage and incentivise growth in local businesses and work alongside Greater Manchester to trial this.
“We embrace innovation and greater devolution of power to the regions and local authorities and have a strong commitment to delivering economic growth and prosperity for Cheshire East.
“This initiative will help to attract further investment, jobs and opportunities for the people who live and work here.
“This will become all the more important as we move towards more devolved government. Cheshire East is at the forefront of helping to drive economic growth, job creation and business confidence in the North West.”
Cheshire East Council and Greater Manchester Combined Authority are already part of a government pilot scheme for full retention of business rates growth that began on April 1, 2015.
Cheshire East currently collects around £130m in business rates and keeps just 27 per cent – around £40m
The Council receives formula grant from government totalling £50m plus around £30m of other grants. The change announced could mean circa £5m-£10m of new financial benefit to Cheshire East.
Shops, offices, factories and businesses currently pay a uniform business rate set by central government.
Councils collect the tax and send the funds to the Treasury, which then redistributes them so that areas with fewer businesses do not lose out. Since 2013 local councils have been able to keep up to half.
Central government currently takes in about £11.5bn in business rates nationally and redistributes £9.4bn in grants.
Mr Osborne said the change, due to be in place by 2020, would mean cities and communities no longer would have to go to the Government ‘with a begging bowl’.