MP accuses '˜smoke and mirrors' budget as threat to council funds

Wigan Council will be among the first in the country to trial the government's new business tax scheme which will see town halls keep more of their business rates revenue.
Wigan Town HallWigan Town Hall
Wigan Town Hall

The move is aimed at scrapping the main central government grant and Greater Manchester and Liverpool will pilot the scheme from next year ahead of a national rollout.

Chancellor George Osborne has said the reform will make councils self-sufficient and more competitive.

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But Wigan MP Lisa Nandy has said the change will mean “a cut to local government funding”.

Around 600,000 small firms will pay no business rates from next April, while help will be given to people selling goods online or renting out their homes through the internet, the chancellor has also said.

Wigan MP Lisa Nandy said the increased reliance on business rates was “smoke and mirrors”.

Ms Nandy told the Evening Post: “This is typical smoke and mirrors from Osborne. Reducing business rates sounds like a good idea but in reality this is a cut to local government funding, since the chancellor made councils reliant on business rates, which will hurt local economies and businesses.

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“A budget that gives with one hand and takes away with the other.

“The chancellor had nothing to say to one in five children in Wigan who are growing up in poverty.

“And his decision to fund tax cuts for high earners by taking almost £3000 a year from disabled people will send chills down the spine of families in Wigan and across the country. This budget has unfairness at its core and fails to deliver the prosperity or the jobs we need in Wigan.”

Objectors have said the funding reforms place less affluent areas at a disadvantage. Currently town halls receive a main government grant, council tax revenue and a proportion of business tax income.

Although it is unclear whether the 10 Greater Manchester authorities will collect their business rates into a joint pot and then redistribute based on need or choose an alternative system.