‘£41m cost’ of business rate change

Oldham could lose up to £41 million — the cost of running all its council staff and buildings — under proposals to change the way business rates are distributed, Labour has warned.

Oldham Labour leader, Councillor Jim McMahon, says the Government’s proposals would slash the £95million Oldham currently gets from business rates, by over half.

The Local Government Resource Review is being masterminded by Communities’ Secretary Eric Pickles, but has not yet been published.

Currently business rates are collected locally, but put into a pot and redistributed nationally so that areas rich in businesses contribute towards places like Oldham, where businesses such as engineering and manufacturing are shrinking.

Under the new proposals, Mr Pickles says councils would keep the business rates they collect, and even be able to borrow against them.

He believes the move will be an incentive for councils to support businesses and growth, while vulnerable areas where not as much money is raised will be helped by central government.

But Councillor McMahon said: “We rely on the redistribution from areas which are doing well. It is Labour authorities which are being whacked. Based on figures for 2009/10, Oldham would lose £41million, Rochdale £28million, while Trafford would gain £84million.

“In London, Westminster would get £950million, but Birmingham would lose £175million.”

Councillor McMahon (pictured) is calling on the borough’s three Labour MPs — Debbie Abrahams in Oldham East and Saddleworth, Michael Meacher (Oldham West and Royton) and David Heyes, (Failsworth) — together with the Labour group on the Local Government Association, to lend their support against the moves.

He added: “A total of £41million is the cost of physically providing all of the council’s staff and buildings — with no money to run any services.

“Oldham Council has already saved £50million over the past three years, and we also have another £20 million to find next year.

“This business rate plan is bad news and we need help.”