Chesterfield Borough Council has hit back following news that government cuts will mean local authority funding may be cut by 50 per cent by 2020.
The chancellor, George Osborne said in his latest spending review that changes will mean councils lose all of their government grants, leaving them to fend for themselves.
The news follows an announcement that local authorities will be allowed to retain 100 per cent of their business rates, a percentage of which is currently handed over to central government.
The chancellor said on Wednesday, November 25: “Because the amount we raise in business rates is in total much greater than the amount we give to local councils through the local government grant, we will phase that grant out entirely over this Parliament.
But while the conservative government maintains councils will be better off keeping local revenue in the district, there is concern of a ‘postcode inequality’, and that poorer councils with higher social spending will suffer.
And in Chesterfield, the borough council said the plans are so unclear, that they can’t tell if they’ll be better off or in a state of emergency.
Leader of Chesterfield BC, Cllr John Burrows, Labour, said: “The government isn’t releasing to individual councils what their individual grants and rates retention will be. We don’t know what it’s going to be. Ultmately, if that headline figure is right, and we’re going to lose 50 per cent, it spell disaster. We will not be able to maintain the services on that basis.”
“The government refuses to be specific on what “100 per cent rates retention” means.”
Currently Chesterfield Borough Council acts as a collector for business rates and council tax which is spread between the county council, fire authority and Police and Crime Commissioner, and roughly half of all business rates go to the government.
Last year the council received £3.3m in revenue support grant, already cut by £1,1 million since the previous year year, and only £2m in business rates.
Chesterfield would need to retain the whole of local business rates to make up the loss, but this is hugely unlikely, added Cllr Burrows.
“If we can retain 100 per cent of business rates then that’s a massive hooray,” he said. “But I don’t think we will. We currently pass a proportion to the county council, the police and fire services, so even if we did keep it all, where would that leave them?”
The scheme for retaining some business rates locally only came into effect in 2012, and this new move will further separate local and central government, leaving councils is a difficult position where they have to fund services themselves, but have little power to raise taxes, and a number of incentives to lower them.
Abolishing the ‘uniform business rate’ is part of this, said George Osborne last week: “If we really want to shift power in our country, we have to give all local councils the tools to drive the growth of business in their area – and rewards that come when you do so. So I can confirm today that, as we set out last month, we will abolish the uniform business rate.
“By the end of the parliament local government will keep all of the revenue from business rates.
“We’ll give councils the power to cut rates and make their area more attractive to business.
“And elected mayors will be able to raise rates, provided they’re used to fund specific infrastructure projects supported by the local business community.”
Leader of Derbyshire County Council Anne Western echoes the sentiments and said it was too early to tell what the impacts of the spending review would be.
She said: “It’s too early to say what the changes will mean for the county council’s finances.
“Details about the revised Business Rates Retention Scheme won’t be published until the new year. We need to analyse the report along with the local government settlement to be announced in December before we really know what we’re facing.”