The Greater Manchester Combined Authority (GMCA) has agreed to take part in the government’s 100% business rates retention pilot despite it being “less ambitious in scope” than originally planned.
In the local government settlement last year communities secretary Sajid Javid announced that he had agreed to pilot the 100% retention of business rates with three devolved regions including GM starting this April, with three further regions now having agreed to take part in the pilot.
The government believes that the 100% retention rate will allow devolved regions to see the long-term rewards from growth, giving authorities an incentive to grow their local tax base, whilst helping LAs maintain a predictable income stream for funding local services.
While the GMCA said that the pilot is “less ambitious in scope” than had previously been envisaged, the decision has been made to agree to the deal saying it would put the region “at the front of the queue” for further devolution powers.
A joint GMCA & Association of Greater Manchester Authorities (AGMA) executive board meeting report read: “Following consultation with the 10 GM leaders and interim mayor, GM has indicated to CLG that it will participate in the 100% Business Rates Retention Pilot.
“Whilst the pilot is less ambitious in scope than originally envisaged it has been agreed that the decision is made to progress on the basis that there is a financial advantage to GM and the Districts in taking part; an underpinning no detriment agreement that guarantees that individual districts cannot be worse off.”
Under the government’s proposals, local councils in England will have control of around an additional £12.5bn of business rates revenue, with some specific grants to be rerouted through the local share in order for the government to remain fiscally neutral.
The GMCA has been reassured that while the move does not represent additional funding for local government, the business rates baseline will be reworked to ensure that more deprived authorities do not suffer as a result of the new arrangements.