Business rates concern as Northumberland calls for fairer funding

Last week, Communities Secretary Greg Clark set out his Fair Funding Review, which aims to provide councils with their fair share of funding according to local needs. The Government is set to consult councils, business and other organisations on which financial powers could be transferred to local authorities in the future.

The announcement ties in with plans for local councils to retain 100 per cent of locally-raised business rates by 2020. Currently in Northumberland, business rate income contributes more than 20 per cent of resources to fund general-fund council services.

However, the sparsity of Northumberland, budget cuts of £148million over the past five years and the relatively small numbers of companies paying business rates in the county means the council is not on an even financial footing with many authorities.

Council leader Grant Davey said: “While we welcome the consultation on fair funding and devolving income from business rates to a local level, we are asking the Government to allow us to stand on an equal financial footing with other local authorities, including our neighbours in the North East and in Scotland.

“While retaining all our business rates sounds good news on the face of it, here in a relatively remote and sparsely populated county it’s harder for us to attract new businesses while bigger firms paying higher rates are few and far between. Many firms are also in our enterprise zones which means they don’t even pay business rates, while farmers – a key industry in the county – also don’t pay any business rates.

“While the Government says it will put in safeguards in the fair funding review to protect authorities such as ourselves, we don’t know the detail of this yet and the situation could be much worse with our neighbours able to lower their business rates attracting potential investors away from the county.

“To put this in perspective, Westminster Council accounts for eight per cent of England’s entire business-rates income – more than Birmingham, Manchester, Sheffield, Liverpool and Bristol combined.

“By 2020 Northumberland will receive £6.85 per head for residents compared to more than £66 in metropolitan areas despite the cost of delivering services in the countryside being three times more costly. Even more astounding is our nearest neighbours in the Scottish Borders due to get £1,400 per head in the next four years.”

“While we welcomed the additional £3.15million rural funding we received from the Government for the next two years, it does not change our overall financial position – it’s a one-off payment and in the wider scheme of things is a drop in the ocean.

“We hope the Government sticks to its pledge of providing councils with their fair share of funding. As it stands, we have to cut £58-million from our budget over the next four years.

“Despite all the cuts to date we have worked hard to protect frontline services, whereas other local authorities have cut many services all together. We are safeguarding libraries by moving them into leisure centres, creating one-stop-shops of council services in market towns and selling off or leasing other buildings no longer needed. However, cuts of this scale will inevitably affect our residents.”