Devolved business rates coup hailed

GEORGE Osborne’s Budget announcement that Greater Manchester and Cheshire East Council will be allowed to retain 100% of growth in business rates it raises has been broadly welcomed.

The Chancellor revealed the plan during this afternoon’s Budget speech in which he drove home the importance of the Northern Powerhouse.

Under current arrangements 50% of business rates growth income goes to central government, but Osborne’s move diverts all income to the Greater Manchester.

“With the devolution of power, skills, transport and now health I can now announce we have reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the Northern Powerhouse.

“For where cities grow their economies through local initiatives, we will support and reward them.”

In response to the Chancellor’s statement, Lord Peter Smith, chair of Greater Manchester Combined Authority, said: “We have long made the case that capturing the benefits of growth is a key part of our ambition to secure fiscal devolution for Greater Manchester.

“Stimulating growth, and helping our residents benefit from it, is already a key priority for GMCA. This announcement means we will be able to keep more of the proceeds of growth within the area – rather than handing them over to central government – and reinvest them in measures designed to encourage further growth here.

“It will be a virtuous circle and we can only gain and not lose funding through this new arrangement.

“This is another significant step in the right direction and is another example of Greater Manchester being at the heart of innovation.

“It comes on top of November’s ground-breaking devolution deal and last month’s agreement to devolve the health and social care to Greater Manchester. We hope this latest announcement will be the first step to full business rates devolution as we continue our journey towards a financially self-sustaining Greater Manchester.”

Cheshire East Council leader Cllr Michael Jones said: “This is fantastic news and something we have been pressing for, for some time. It means we get to keep more of the business rates that we generate locally.

“We are delighted to be at the forefront of the Chancellor’s new pilot to encourage and incentivise growth in local businesses and to work alongsideGreater Manchester to trial this.”

Phillip Woolley, the Manchester-based partner in Grant Thornton’s Government and Infrastructure Advisory Practice said: ““The business rate retention goes beyond the original earn back model under the Manchester City Deal, but is consistent with the direction of travel under the devolution agenda of this government, and Manchester as the pioneer City for this.

“Greater Manchester now has the chance to accrue a substantial growth dividend, from sound and robust  investment decisions in infrastructure, growth and skills.”
 
Mark Rigby, chief executive at Manchester-based property company CVS, added: “This could be great news for Manchester and shows that business rates can be used to incentivise economic growth and enable local voices to define how this should happen.

“This fiscal devolution has come hand in hand with more political autonomy, which is the combination needed to empower regional cities and deliver the Chancellor’s Northern Powerhouse. In the face of upheaval of the business rates system, this announcement is also a reminder of the value of a link between local, property taxation and local growth and services.”