The Local Government Finance Act 2012 creates a new model for funding local authorities from April 2013, linking their financial revenue to the decisions they take to support local firms and local jobs.
Local authorities across the country will retain a 50% local share of the business rates they collect and then keep a 50% share of any growth they generate, subject to a levy, therefore providing a strong incentive to go for growth.
This new system could deliver around an extra £10billion to the wider economy by 2020 and through development and regeneration of run down areas could generate more business rate income for councils..
Local Government Minister Brandon Lewis said:
“Today, after listening to councils, we are setting the central principles for how the new rate retention scheme will work next year. Ahead of the formal funding settlement next month this will give councils the certainty and security to begin planning their budgets for next year.
“The old flawed system of government handouts to local authorities encouraged a begging bowl mentality, with each council vying to be more deprived than its neighbour.”
“These reforms allow councils to stand tall, and reward them for supporting local jobs and local firms. All councils, including the least prosperous, have the opportunity to gain from this system.”
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