Though Cowards Flinch

Communities Minister Eric Pickles has revealed that councils will be able to keep the growth in rates they raise from local businesses, a change from the current system which sees councils collect rates on behalf of central government, which then redistributes it to councils according to need.

But critics have pointed out that poorer areas will benefit the least, since they’re the ones having difficulties in attracting local business. Pickles has promised central government will pay a fee to councils as a safety net, in case business rates fall – but this will not suffice to cover costs in area improvements or bids to attract businesses.

For the most deprived areas these changes, set to occur in 2013, will make local growth even more difficult – but then these places aren’t Tory hot spots anyway, so was Pickles really going to go out of his way to appease them?

In order to give areas what Pickles calls a “direct growth incentive” he is taking away from “councils which rely on business rates redistribution” without a plan of action for how those areas can attract growth too.

But thriving areas are incentives in themselves, and now local governments will have to compete with each other to attract business, without any change being done to how they set rates – which will still be set centrally by the Valuation Office Agency. The upshot of this will see a wider rich/poor divide between areas at a time when many services are being cut.

It’s hard not to see this is a typical Tory ploy: a deprived area is no longer a beneficiary of a re-distributive business rate system, it becomes less attractive to businesses looking to set up/invest/maintain residence in an area, the area loses out on rates, it relies on the new system of basic tariffs, and cannot afford to spend money on improvements to attract business. The poor stay poor, the rich get rich.

What chance does a deprived area have? Even if they were given control of how they set business rates, in order to attract business they would be forced to offer low rates which will have detrimental effects on how much they can raise anyway.

This is really the wrong direction for the empowerment of local councils, but is unsurprising of a Tory mindset (and championed by Nick Clegg – the yellow Tory) that wants to remove redistribution of wealth from affluent areas to ensure poorer communities don’t fall through the net.

Updated 15:41