At the moment councils collect council tax and business rates. Broadly speaking, councils keep the council tax but pass the business rates back to Central Government. Central government then gives some of that back to councils as government grants
George Osbourne has announced today that in the future councils will be allowed to keep all business rates from their area. This is going to be a massive change for councils and gives us lots to think about.
Here’s a few early thoughts:
This obviously gives councils great incentives to attract businesses to their areas
It’s not clear yet how the money will be shared out between County Councils and District Councils. Will Parish councils get anything?
It will encourage councils to work harder to promote their town centres – and might discourage councils from increasing car parking charges
It all fits in with the recent discussions about having a combined Essex Authority to attract business and infrastructure. If this goes ahead, it will encourage Essex Councils to pool business rates and to work together – so that if there is a new business park in Essex, all councils might benefit?
Business rates do hit some small businesses very hard but rents can hit them very high as well!
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