At the Conservative Party conference yesterday, Chancellor George Osborne announced that local authorities across England will have the right to keep all proceeds they collect from business rates in their area.
The move means that approximately £26 billion of funding will be given by Westminster to local authorities, which is being described as one of the biggest power transfers seen in the UK’s recent history.
Mr Osborne said: “All £26 billion of business rates will be kept by councils rather than being sent back to Whitehall.”
The uniform rate set by the Government will also be cut, meaning that councils will have the additional freedom to cut the amount that businesses have to pay, depending on the unique factors in their area.
However, only those councils that have an elected mayor in place will have the freedom to implement a rate rise.
The new rules will be in place by 2020, according to the Treasury, but Westminster has also highlighted its plan to ensure a ‘safety net’ is in place to protect areas if the amount they collect from business rates falls by 7.5 per cent.
Since 2013, councils are permitted to keep up to half of the money collected from business rates, which were first launched in 1988, but they are initially required to send the money to central Government first, where it is then redistributed.
The new changes will be introduced as part of the Government’s plan for power to be devolved from London and handed over to communities across the country.