SCOTTISH councils have called on the SNP Government to follow the lead of George Osborne’s “devolution revolution” by allowing them to have wider powers over business rates, including raising them, in order to regenerate their high streets.
The Chancellor used his keynote conference speech to announce a radical change from the current system operating south of the border, whereby £26bn raised from rates is sent to Whitehall to be redistributed in grants to town halls along with the abolition of the uniform business rate, which imposes a single tax rate on every council in England.
In future, councils will be free to cut business rates to attract new jobs but also elected mayors in big cities like London, Manchester and Sheffield will be allowed to add a premium to rates to pay for major infrastructure projects.
Mr Osborne said devolving the raising and spending of business rates was one of "the biggest transfers of power to our local government in living memory" and would help restore local government.
"The way this country is run is broken,” declared the Chancellor. “People feel remote from decisions that affect them. Initiative is suffocated. Our cities held back. There's no incentive to promote local enterprise. It's time we fixed it."
His plan would mean "money raised locally, spent locally; every council able to cut business taxes, every mayor able to build for their city's future, a new way to govern our country...Power to the people. Let the devolution revolution begin”.
In response, Cosla, which represents 28 out of Scotland’s 32 councils, called for John Swinney, the Scottish Finance Secretary, to follow Mr Osborne’s lead.
A spokesman said: “We would want the same in Scotland,” noting how Cosla had already made a strong case for “fiscal autonomy”, including the localisation of the nation’s £2.5bn of business rates.
Frank McAveety, Leader of Glasgow City Council, welcomed Mr Osborne’s announcement but stressed the benefit would “only be felt by our sister cities in the rest of the UK and not in Glasgow or the rest of Scotland”.
He said Glasgow had long argued that giving cities greater ability to amend and set their income was a “crucial next step” in empowering them to achieve their full potential.
“Such investment is necessary to develop local economies and we will continue to make calls to the Scottish Government for the devolution of similar powers to Scottish cities.“
But a Scottish Government spokesman insisted Scotland already had the most competitive business tax environment in the UK and the Chancellor’s proposals would not change that.
He stressed how Scottish councils already retained all of the business rates they collected and the power to reduce them was being devolved this month.
“In contrast, to UK Government funding of English councils, the Scottish Government has treated councils very fairly with a total settlement this year of over £10.85 billion,” noted the spokesman.
He added: “We are keeping business rates arrangements under active review, building on our improvement plan ahead of the 2017 revaluation.”
John McDonnell MP, the Shadow Chancellor, said more needed to be done on business rates and Labour would look at the detail of the UK Government’s reforms.
“But people will rightly look at the record of George Osborne under whom business rates rose by around £1500 in the last Parliament. In particular, we need to ensure that the right safeguards are in place so that poorer areas of the country do not lose out on vital revenue,” he added.
In his keynote address, regarded by many as a pitch in his long-term bid to succeed David Cameron as Tory leader, the Chancellor declared how the Conservatives were the now “the builders”, the party for working people and the “only true party of labour”.
He claimed Labour under Jeremy Corbyn had turned its back on opportunity and aspiration and were now “the wreckers”.
But Ian Murray, the Shadow Scottish Secretary, insisted Mr Osborne’s speech would “fool no one in Scotland” and dismissed the notion the Tories were now the party of working people as “empty rhetoric” given their tax credits cuts would leave Scottish families an average £1300 a year worse off.
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