Birmingham to pilot full business rate retention

11 Oct 16

The West Midlands is set to join the areas across England that will pilot full business rates retention ahead of the national rollout of the scheme in 2020, after Birmingham City Council indicated its support for the move.

The authority announced today that it would support plans for the West Midlands combined authority to introduce full business rates retention from next April. If this is agreed, the region would join the Liverpool city region, Greater Manchester, the Greater London Authority and Cambridge in pilots.

The government plans to devolve business rates to authorities by 2019-20. A funding baseline is likely to be set for town halls using local business rates as well as either a top up or tariff payment to reflect a new assessment of local need. Authorities will then retain all local rate growth, up from the 50% share currently allotted to the sector, and will be financially self-sufficient, with other locally raised revenue, mainly council tax, used to provide services.

Birmingham council leader John Clancy said this reform would become a reality sooner rather than later, so testing the scheme would help the authority understand how it will work, as well as provide information for the national scheme.
“Just as importantly, it will also facilitate discussions with government about further devolution, again ensuring that Birmingham and the wider West Midlands gets the best deal possible.”

Combined authorities that have reached devolution deals with government, which include the West Midlands combined authority, can apply to trial full business rates devolution.

Pilots will operate on a “no detriment” basis, so that no participating authority can be any worse off financially than they would otherwise have been, but Birmingham highlighted there were potential benefits from real-terms growth in the share of business rates.

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