London local government will be better off by an additional £240m next year under its 100% business rates retention pilot, confirmed by the chancellor this afternoon.
The pilot will see London keep all the growth in business rates including the levy currently paid by some councils with high levels of growth. Combined this is forecast to be worth £240m in 2018-19.
Papers published alongside the Budget announcement this afternoon said the capital’s councils and the Greater London Authority would “come together to form a pool and invest revenue growth strategically on a pan London basis”.
Claire Kober (Lab), chair of London Councils, said: “This is an essential step towards more sustainable funding of the local services upon which Londoners and London’s businesses depend. It will enable further investment in vital infrastructure to support economic growth and create more jobs across London.”
Following the 2017 revaluation London is expected to collect £8bn in business rates next year. Under the pilot London will retain 64% of its business rates compared to 50% under the current system. This is equivalent to £5.1bn. Councils in the capital will continue to pay £2.8bn in tariff payments which will be redistributed around the country.
Budget papers also confirmed the government’s intention to launch pilots in a number of other areas for 2018-19. LGC recently revealed 23 bids had been submitted involving more than 180 councils.
The papers said: “New pilots for 2018-19 will be announced following the Department for Communities & Local Government’s assessment of recent applications to its scheme.”
Pilots are already underway in Cornwall, Greater Manchester, the West Midlands, Liverpool City Region and the West of England.