Pickles plans to let councils keep 90% of business rates

10 Jul 14
Local Government Secretary Eric Pickles has said he would be ‘very disappointed’ if councils were not retaining nearly all of business rates by the end of the decade following the coalition’s local government finance reforms.

By Richard Johnstone | 10 July 2014

Local Government Secretary Eric Pickles has said he would be ‘very disappointed’ if councils were not retaining nearly all of business rates by the end of the decade following the coalition’s local government finance reforms.

Eric Pickles

Speaking to the Local Government Association's conference yesterday, Pickles said localisation of 50% of business rates from last April had increased the financial freedom of local authorities.

‘As the public finances improve I want the local share of business rates to steadily rise,’ he told delegates, reiterating the pledge he made at last week’s CIPFA conference to increase the local share at the next Spending Review.

Asked yesterday how he would like to see the local share increase, Pickles highlighted that initial plans had envisioned only one-third being localised to town halls.

‘I started out at 33% and through a process of persuasion, blackmail and sheer nastiness got it up to 50%.

‘I would be very disappointed if we couldn’t by the year 2020, have got it up to higher 80% or lower 90% as a percentage. That I think would give you an enormous degree of flexibility.’

In his speech to the LGA, Pickles also criticised councils for calling for the cap on Housing Revenue Account borrowing to be lifted while some of the limit had remained unclaimed. For example, this week's growth deals with each of the 39 local enterprise partnerships left £267m, including allocations of extra borrowing headroom from the Housing Revenue Account, unallocated.

I know you want even more freedoms on housing finance, but if you forgive me for being frank, this is a two-way conversation,’ he said.

‘So far, not enough councils have come forward to use their existing revenue account freedoms, and some councils are not even using the receipts from Right to Buy to build more council housing.’


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