Plan to free-up council finance

Kirklees Conservative Party local election campaign launch with Cabinet member Eric Pickles. (d28031145)
Kirklees Conservative Party local election campaign launch with Cabinet member Eric Pickles. (d28031145)

COUNCIL bosses could be handed control of more than £100m collected each year from business rates in a shake-up of local authority finance.

Instead of the taxes being pooled and redistributed by central government, councils will keep their business rates under proposals by the coalition government.

The plan has raised fears that councils with smaller commercial zones could lose out because of lower levels of rates.

But bosses at Wakefield Council, which collected £102.8m in business rates last year and received £123.3m from the government’s central pool said it was too early to say if the plan would benefit the district.

A council spokeswoman said: “The government is currently consulting on proposals to repatriate business rates. The consultation closes on October 24.

“Until the consultation is completed and the government issues the details of how a system of local retention of business rates would work it is not possible to say whether or not it may be beneficial to the district.”

The Department for Communities and Local Government said a system of top-ups was planned so councils do not see income fall below a baseline level.

Local authorities will also be handed powers to borrow money secured against future business rates income under a system called Tax Increment Finance (TIF).

Critics of TIF say it is risky and could encourage irresponsible borrowing.

But local government secretary Eric Pickles said: “By letting councils keep the products of enterprise we will end their disparaging dependence on government handouts, finally start rewarding economic growth and support local firms and new jobs.”