28 February 2003
Councils will be able to keep millions of pounds gleaned from business rates if they generate economic growth across their communities, under plans unveiled by local government minister Nick Raynsford this week.
An amendment to the Local Government Bill, currently working its way through Parliament, will encourage councils to pursue business growth more vigorously by allowing them to retain revenues linked to local regeneration and expansion, Raynsford said.
The move, announced on February 25, follows a recommendation made by the Treasury in the 2002 Pre-Budget Report. It is being flagged up by the Office of the Deputy Prime Minister as an example of Raynsford's promised freedoms and flexibilities for councils.
Raynsford said: 'Any scheme introduced will generate additional revenues from increases in the tax base, for example as new businesses are formed. There will be no question of increasing the tax on existing businesses and the money raised would be genuinely additional to councils, which will be free to decide how to spend it.'
Raynsford also staved off some poorer councils' concerns, by assuring them the department was working on ways to allow areas in decline to benefit from additional business rate cash – providing they can show they are slowing the pace of decline.
Local Government Association chair Sir Jeremy Beecham applauded the decision, saying it would give councils more incentives 'to work with industry and commerce locally to encourage the development of new businesses'.
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