Anxious wait ahead for businesses and council

Chancellor George Osborne
Chancellor George Osborne

TOWN Hall officers will be joined by borough business owners in anxiously counting down the days to next month’s government spending review.

The Chancellor last week announced a major shake-up to the local authority funding system, devolving control over business rates collection.

It means town halls will be freed up to lower business rates if they choose and will keep all of the revenue for the first time although one impact may put Wigan at odds with Greater Manchester.

Wigan business owners have in recent years bemoaned what they see as high and impractical rates with several ceasing to trade as a result.

But town hall bosses may be unable to cut the current rate as direct government grants will no longer be handed out and business revenue will be integral to balancing the books. And so the details of the new system - which will be revealed by George Osborne in the spending review in late November - will be keenly anticipated.

Much of the reaction to the “biggest transfer of power to local government in living memory” has reflected that the devil will be in the detail.

Wigan Council leader Lord Smith said: “It is too early to say exactly how it will affect Wigan. We will have to read the fine print and learn more about the extra responsibilities that come with the changes before we can make a conclusion.

“I welcome the government giving more powers to local government and on the whole it is a positive move to give us business rates back. However the government has to recognise there will be winners and losers particularly with areas that have more need.”

Similarly, Mandy Summerscales, a former Wigan business award winner who closed her Fashion PA boutique last year due to high rates, urged caution. She said: “I would have liked the system to remain centralised but with the rates calculation changed. This could open a can of worms for councils or it could work to their advantage.”

The new system could, in theory, put Wigan on a collision course with its Manchester colleagues as areas with a directly elected mayor will be permitted to raise rates to pay for infrastructure projects.

Borough officers could therefore favour a rates reduction to attract firms but may be superseded by the region’s elected mayor post-2017.

When asked this week how he could persuade people that his new model of council funding would be fairer, Mr Osborne confirmed that all would be revealed next month.

He said: “What we are really saying is that local areas will now have the powers to grow and keep their revenue.

“Greater Manchester has led the way in this and we are also giving this new power specifically for a place like Manchester, with an elected mayor, to invest in its local infrastructure. So I think this is a huge opportunity.”

Christian Spence of GM Chamber of Commerce said: “Businesses will be fearful that they may be used as a cash cow by local authorities seeking to protect their declining revenues.”