Business rates announcement expected today

Author: James Illman, LGC   |  

Ministers are set to unveil proposals on re-localising business rates to councils today, the Department for Communities & Local Government has confirmed.

Communities secretary Eric Pickles is expected to make an oral statement to the House of Commons before publication of a consultation on the first phase of the local government resource review.

Ministers say the new arrangements will allow councils to benefit from growth in businesses rates in their area and insist that re-distributive mechanisms will mean less well-off areas will not lose out.

Councils will not be given power to raise the rate, which would have provoked a furious reaction from the business lobby.

Sources close to the negotiations around the proposals told LGC they expected the paper to focus more on principles and a broad direction of travel rather than firm details on how localisation would be accomplished.

As reported by LGC in May, the new system is expected to use a new ‘baselines’ for business rates, set using the allocations from next year’s formula grant settlement.

Councils will then either be classed as in ‘deficit’ or in ‘surplus’ for the first year of the new scheme, according to whether they raise more in rates than they spend. A ‘tariff’ would be collected from those that generate a surplus and a ‘top-up’ paid to those that have a deficit.

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