Councils should keep business taxes, says Eric Pickles

Communities Secretary Eric Pickles Eric Pickles says the current system is a "disincentive to growth"

Related Stories

Councils in England could keep taxes raised from local businesses to make them less dependent on Whitehall funding, under government proposals.

Currently £20bn of business rates are collected by councils but sent to central government, which redistributes them according to need.

Communities Secretary Eric Pickles said that was a "disincentive to growth" and is reviewing council resources.

Labour said the poorest councils must not be allowed to lose out on funding.

Mr Pickles launched the first part of the Local Government Resources Review on Thursday, to look at ways to set up a new system for business rates and the government grant.

He said the current system penalised "economically successful" councils and the government wanted to reduce dependency on Whitehall grants for as many councils as possible.

The government hopes that allowing councils to keep their own business rates will be an incentive to encourage private sector growth and regeneration by giving them a "direct stake in the future of their area".

'Dire consequences'

But they say the review will be "fair to all councils" and those in the most deprived areas will continue to get central government support.

Mr Pickles said: "We want every community to be open for business and rewarded for economic growth, but at the moment there is no motivation for councils to support local firms or create new jobs."

"One of the best ways we can change that is to free councils from their enslavement to government grants and put them in control of their own destiny.

"By letting councils repatriate their business rate income, you make the system more straightforward and councils more self-sufficient in one fell swoop whilst deprived councils would still get the support they need."

But, for Labour, shadow local government secretary Caroline Flint said the poorest councils were already getting hit harder by cuts than richer councils.

She said: "Fairness and incentives to boost enterprise right across the country should be at the heart of any reform.

"The government must look at ways to ensure those currently reliant on redistribution do not lose millions of pounds in funding, which would have dire consequences for local jobs and growth as well as front line services."

The government will consult with councils and business about the proposals before reaching conclusions in July.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Politics stories



  • Mukesh SinghNo remorse

    Delhi bus rapist says victim shouldn't have fought back

  • Aimen DeanI spied

    The founder member of al-Qaeda who worked for MI6

  • Before and after shotsPerfect body

    Just how reliable are 'before and after' photos?

  • Lotus 97T driven by Elio de AngelisBeen and Gone

    A champion F1 designer and other notable losses

  • A poster of Boris Nemtsov at a rally in St Petersburg, Russia, 1 MarchWho killed Nemtsov?

    Theories abound over murder that shocked Moscow

Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.