Osborne transfers business rates power to local councils

George Osborne has announced that the power to set business rates will be handed to local authorities.

Speaking at the Conservative Party conference, the chancellor said uniform business rates would be abolished, with local councils given the authority to discount and levy rates while retaining their entire revenue. At present, councils raise £26bn from business rates, but the money is pooled by Whitehall and then redistributed.

Osborne called the decision “the biggest transfer of power to local Government in living memory”, but the retail industry has hit out at the move.

ACS chief executive James Lowman criticised the chancellor for making the announcement at a time when Government is supposed to be considering responses to a large scale review of the business rates system. “One of the consequences of locally-set business rates will be that local authorities under financial pressure may be tempted to increase business rates to foot the bill, which is why business owners need certainty through a clear national framework,” he said.

“We urgently need to see more details of the chancellor’s plans, and we need reassurance that local shops and other businesses will not see higher rates bills as a result of this policy.”

Business rates expert Paul Turner-Mitchell added: “Any proposal would have to address the fact that this could exacerbate the current north south divide. The high-value prosperous rateable values in the south would enable councils to reduce rates significantly whereas councils in the struggling north would need to raise rates.”