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Local democracy think tank the Local Government Information Unit has given a cautious welcome to the announcement b...
Local democracy think tank the Local Government Information Unit has given a cautious welcome to the announcement by the chancellor and the deputy prime minister that councils will, from April 2005, be allowed to keep some of the business rate revenue from new businesses that start up in their area.*

Since 1990, when the introduction of the uniform business rate centralised taxation on business premises, councils have had to pass on all extra revenue from new enterprises to the Treasury. The LGIU's Commission on Local Governance last year recommended the return of business rates to local authority control as a means of ensuring that councils raise at least half of their revenue locally. The LGIU believes that this is a key step in revitalising local democracy.

Dennis Reed, chief executive of the LGIU, said: 'The extra funding that may come in two years time from this minor step in the right direction will be welcomed by any hard-pressed councils who could gain from it.

'However, apart from giving rise to the potential for yet more of the cumbersome Whitehall bureaucracy that has caused enough problems recently, this move must not be the final word on the business rate issue. In particular, I hope that ministers will keep open minds about the outcome of the present review of the balance between local and central funding for local authorities.

'Restoring business rates entirely to local control is an essential step towards councils raising at least half of their own revenue. This, in turn, is the key to reviving local democracy. Until this happens, few councillors will be dancing in the streets.'


1. The LGIU is Britain's foremost independent local democracy think tank, campaigning to extend local authority best practice, f reedoms and responsibilities. Recent initiatives have included the Commission on Local Governance and the LGIU is working to influence the debate on local government modernisation. The LGIU and its education service The Education Network also provides research, policy briefings, information, advice, training and lobbying services to 150 local authority and trade union affiliates. Previous LGIU news releases and statements can be viewed at


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