Fears that Councils will Waste £26bn Business Rates Handover

Posted on 9 March, 2016 by Chris Grigorovsky

New research has emerged, revealing that George Osborne’s plans to hand councils control of business rates will make the system worse and not boost growth.


A poll of businesses said that the Chancellor’s decision to let authorities keep £26 billion of revenues to spend on services, could result in wasteful expenditure.

The move, described by Mr Osborne as part of a “devolution revolution”, is meant to give local authorities a control of their spending and introduce a whole new way in which councils are funded.

Councils will be able to cut business rates in order to boost enterprise and keep the benefits from increased revenues.

However, nearly half of the 500 businesses surveyed by the ICAEW said they were not confident that local authorities would set acceptable levels of rates, 54% had no confidence that the money raised would be used “adequately to promote local or regional growth.”

On the other hand, 38% said that councils would make the right decisions on spending.

Director at the ICAEW, Stephen Ibbotson, shared his thoughts on the “worrying” findings, saying: “Devolution was cited by the Chancellor as helping to attract investment and drive regional growth. But many businesses do not have confidence in their local authorities to invest any additional income raised through business rates in the right places.

He continues: “With economic growth expected to be revised down at the Budget and the amount spent on these projects, the Chancellor needs to start asking businesses what they really need to help them grow.”

On March 16, Mr Osborne is set to provide more details regarding councils being able to set business rates and how they are used in the Budget.

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