21 November 2003
London and the West Midlands could each gain an extra £150m over three years under plans to let councils keep some of the business rates raised locally, new Treasury figures show.
Ed Balls, Gordon Brown's economic adviser, indicated that the two regions stand to gain the most when the proposals, intended to reward authorities for attracting firms into their areas, are implemented in 2005.
Other winners include the Northwest, which would gain £130m over three years; Yorkshire and the Humber, £120m; and the Southeast, £110m. The Southwest would net £85m; the East, £80m; the East Midlands, £60m; the Northeast, £55m; and Wales £65m.
The scheme, first announced by Brown last year, will encourage authorities to stimulate local business growth by allowing them to keep a proportion of the extra rate revenues generated.
Balls revealed the Treasury's analysis at a conference in Manchester on November 18. He told delegates that support for the proposals was strong. 'The response to the consultation has been excellent and has shown that both local authorities and businesses would welcome the additional resources and the freedom to spend them on local priorities.'
Balls also said Brown would use his pre-Budget report on December 10 to indicate how the business rate growth initiative would work. Full details would be outlined in next year's Budget.
David Maddison, project officer for the Local Government Association, welcomed the news but told Public Finance the government must ensure all councils can benefit.
'We have to find a scheme that is intelligible and accessible for everyone from Wandsworth to Wakefield, or it's not on,' he said.
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