Birmingham City Council is set to offer its support for a West Midlands-wide business rates pilot. Whitehall is planning to replace the local government grant with 100% local retention of business rates by 2020.
In preparation for this radical change in the way local authorities are funded, the Government is giving councils that have agreed to a devolution deal the opportunity to pilot the new arrangements from 2017/18 onwards.
The pilots will operate on a ‘no detriment’ basis, so that no participating authority can be any worse off financially than they would otherwise have been.
However, there is the potential for financial benefit arising from the real terms growth in the share of business rates that is currently passed to Government.
The West Midlands, which has agreed to a devolution deal, has backed the pilot scheme, and now needs all seven metropolitan councils to formally agree to the plan, before any final sign-off by the Government.
Cllr John Clancy, leader of Birmingham City Council, said: ‘The Government’s reform of local government finance will become a reality sooner rather than later, so our participation in a pilot will give us the opportunity to look at how it works in the West Midlands, and then help shape national thinking about the way the full national scheme will be implemented in due course.
‘Just as importantly, it will also facilitate discussions with Government about further devolution, again ensuring that Birmingham and the wider West Midlands gets the best deal possible.’
Counties and districts have recently expressed concerns over the pilot schemes. They warned the pilots may see urban areas retain an ‘unfair share of national resource’ if Whitehall failed to acknowledge the concerns of rural areas.