Pickles in pledge to protect rates money

COMMUNITIES Secretary Eric Pickles has given a “cast-iron guarantee” that Oldham will not lose out under plans to allow councils to hang on to business rates.

The minister insisted no local authority would see cash cut as a result of the move despite warnings it risked “pulling the rug from beneath the finances” of some councils.

Under the current system of the way business rates are collected and distributed, Oldham received £106.1 million in 2010/11, despite collecting just £54.9 million.

The tax applies to business premises and is collected by local authorities before being submitted to central government where it is redistributed to ensure less affluent areas do not miss out.

But under plans announced by Deputy Prime Minister Nick Clegg, councils will allow local authorities to keep what they collect, and legislation going through Parliament would also allow authorities to offer discounted business rates to promote the local economy and kick-start growth.

But the change has sparked concerns that some councils like Oldham could face a shortfall.

Labour Shadow Communities Secretary Caroline Flint said: “Nick Clegg must explain how he intends to localise business rates without pulling the rug from beneath the finances of councils in Britain’s most deprived areas.

“If business rates were completely localised, Westminster Council would gain over a billion pounds, the City of London would gain half a billion, but many other areas would lose hundreds of millions in vital funding.

“Until he sets out in detail exactly how he will ensure that councils won’t lose out under the localisation of business rates, we can’t take his word seriously.”

Mr Pickles said: “I can give an absolute cast-iron guarantee they will not lose a penny and that they will gain from this system. They will be able to see the product of their growth. No authority will lose.”

Speaking at a local government conference in Birmingham, Nick Clegg also said deprived areas would not lose out from the shift.

“From the start, no authority will receive less funding when the new arrangements are introduced than they would have done previously.”