Council chiefs in Hartlepool are remaining sceptical over a Government pledge to hand over all of the business rates collected by local authorities.
Local councils are to be allowed to keep rates which they raise from business in a “devolution revolution” to shake up the way local government is funded, Chancellor George Osborne has announced.
The system which sees cash raised from rates sent to Whitehall to be redistributed in grants to town halls around the country is to be abolished, along with the uniform business rate which imposes a single tax rate on every council.
In future, councils will be freed to cut business rates to attract new jobs, and elected mayors in big cities like London, Manchester and Sheffield will be allowed to add a premium to rates to pay for major infrastructure projects.
The reform was announced in the Chancellor’s speech to the Conservative annual conference in Manchester, as he claimed the mantle for the Tories as “the builders” with a plan for a prosperous future for working people.
But Coun Christopher Akers-Belcher, leader of Hartlepool Borough Council, said: “The council has seen its funding drastically reduced by the Government in recent years so we need to be wary of any scheme that suggests we will benefit financially.
“Over the last five years the funding cut to Hartlepool equates to £313 per person, compared to the national average of £131.
“The devil will be in the detail, but my suspicion is that while the Government is enabling us to retain 100% of Business Rates; they are also planning to phase out Revenue Support Grant.
“The loss of grant will far outweigh any additional income from Business Rates, so we will actually end up far worse off than we are now. We will be left with the stark choice of supporting businesses or cutting further services.
“If the Government had wanted to reduce the Business Rate burden, they could have just funded this at a national level.”
During his conference speech, Mr Osborne said devolving the raising and spending of business rates was one of “the biggest transfer of power to our local government in living memory” and would help restore local government, which had had its wings clipped “again and again” over the past decades by all parties, including the Conservatives.
He said: “It’s time to face facts. The way this country is run is broken. People feel remote from decisions that affect them. Initiative is suffocated. Our cities held back.
“There’s no incentive to promote local enterprise. It’s time we fixed it.”
To applause from delegates, the Chancellor said: “This is what our plan means. Attract a business, and you attract more money. Regenerate a high street, and you’ll reap the benefits. Grow your area, and you’ll grow your revenue too.”
Announcing that his plan would mean “money raised locally, spent locally, every council able to cut business taxes, every mayor able to build for their city’s future, a new way to govern our country”, he declared: “Power to the people. Let the devolution revolution begin.”