Local councils are set to get control of business rates following a major overhaul of the system announced by George Osborne today.
Speaking at the Conservative Party conference, Osborne announced that councils will be able to set their own level of rates, giving local authorities the freedom to compete with one another for business.
Osborne said that the £26bn raised in business rates each year will be devolved to local councils, calling it the “biggest transfer of power to our local government in living memory”.
He called the change, which will be put in place by 2020, a “devolution revolution” and said that it would allow councils to lower rates if they could afford to. Currently all businesses pay a uniform rate set by the central government.
In response to the announcement, a spokesperson for the British Retail Consortium (BRC) said: “We look forward to learning more about the Chancellor’s plans to fundamentally reform the business rates system in the autumn.
“Today’s announcement only highlights the urgency of reforming this outmoded tax which acts as a drag on the economy.
‘We will now look closely at the detail as it emerges but it’s worth remembering that there is a widespread consensus that any package of reform to the system must address head on the need to reduce the burden of a tax that discourages investment in jobs and growth.
‘The national business rates multiplier needs to be frozen, and then reduced to encourage local and national growth. The detail of the Chancellor’s plan and on-going review is now absolutely essential.’
The government announced in December last year that business rates, which date back to 1988, were set to undergo a ‘radical’ review.