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Councils encouraging local business growth will be rewarded with more funds.
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| Councils encouraging local business
growth will be rewarded with more funds to spend on local services
for their community under new legislation announced last week. Local Government Minister, Nick Raynsford, announced that the Local Government Bill will be amended to include new provisions allowing councils to retain revenue from increased economic growth and regeneration in their area. Nick Raynsford commented: "These proposals will allow us to introduce a scheme, along the lines the Chancellor announced in his 2002 Pre-Budget Report. The scheme will increase the incentives for business and local authorities to work in partnership to maximise local economic growth and regeneration. "Any scheme introduced will generate additional revenues from increases in the tax base, for example as new businesses are formed. There will be no question of increasing the tax on existing business. The money raised would be genuinely additional to local authorities and they will be free to decide how to spend it. "The scheme will only allow local authorities to keep revenues associated with any growth in the business rate tax base and will be in addition to rather than instead of the current business rate pooling system. The pool ensures that business rate revenues are redistributed to local authorities on the basis of the size of their populations. "We have also been clear that local authorities will not bear the downside risk of a declining business rate tax base. We are considering options that will allow local authorities to benefit from the scheme, even though they are in a situation of economic decline, should they manage to slow the pace of decline." The 'Growth Incentives' scheme will be consulted on during the summer, with the aim to introduce the scheme in 2005, following the next business rate revaluation. The ODPM Web site |