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George Osborne: Councils to keep £26bn business rates | George Osborne: Councils to keep £26bn business rates |
(35 minutes later) | |
Local councils across England will be able to keep all proceeds from business rates raised in their area under new plans unveiled by the chancellor. | Local councils across England will be able to keep all proceeds from business rates raised in their area under new plans unveiled by the chancellor. |
George Osborne told the Conservative Party conference the move would see £26bn diverted from central government to local government. | George Osborne told the Conservative Party conference the move would see £26bn diverted from central government to local government. |
He called it the "biggest transfer of power to local government" in recent history. | He called it the "biggest transfer of power to local government" in recent history. |
Councils will be able to cut taxes to help local businesses grow. | Councils will be able to cut taxes to help local businesses grow. |
The government put the business rates regime, which dates back to 1988, under review in December. | |
'Devolution revolution' | 'Devolution revolution' |
Mr Osborne said the change, in place by 2020, would mean cities and communities no longer had to go to the government "with a begging bowl". | Mr Osborne said the change, in place by 2020, would mean cities and communities no longer had to go to the government "with a begging bowl". |
He said: "All £26bn of business rates will be kept by councils rather than being sent back to Whitehall." | He said: "All £26bn of business rates will be kept by councils rather than being sent back to Whitehall." |
Shops, offices, factories and other small and medium businesses currently pay a uniform business rate set by central government. | Shops, offices, factories and other small and medium businesses currently pay a uniform business rate set by central government. |
Councils collect the tax and send the funds to central government, although from 2013 they have been able to keep up to half. | Councils collect the tax and send the funds to central government, although from 2013 they have been able to keep up to half. |
The chancellor said the new system, which he called a "devolution revolution", would allow councils to lower rates "if they can afford it". | |
He said to councils: "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." | |
'Business approval' | 'Business approval' |
Matthew Hancock, a cabinet office minister, said the change would not bring back the rises of the 1980s, when councils were free to set their own rates. | Matthew Hancock, a cabinet office minister, said the change would not bring back the rises of the 1980s, when councils were free to set their own rates. |
He told the BBC that cities with elected mayors could only raise the rates by up to 2% and "with the consent of the local business community". | |
The Treasury said the current grant, which distributes the rates back to councils from central government, would be scrapped by 2020. | The Treasury said the current grant, which distributes the rates back to councils from central government, would be scrapped by 2020. |
A spokesman said there would be a "safety net" for any area where business rate receipts fell by 7.5%. | A spokesman said there would be a "safety net" for any area where business rate receipts fell by 7.5%. |