news story

28th February 2006

MP Challenges Ministers Over Multi-Million Pound "Raid" on South Gloucestershire Businesses

Northavon MP Steve Webb has used a Westminster debate to challenge the Government over rules on business rates which he says have cost South Gloucestershire Council more than £50 million in the last nine years. He pointed out that this is more than was stolen in the recent raid on the Bank of England's bank note store.

The problem arises because business rates paid by local businesses are handed over to central government and local councils are then given a share of the proceeds according to the size of their population. Because South Gloucestershire has an above- average level of business, the proceeds from business rates from local businesses are substantial, but the amount received back by the Council falls short of the amount paid.

For example, in 2005-06, local businesses paid around £93 million in business rates to central government, but the Council received back only £82 million, a shortfall of £11 million. The total amount lost since Labour came to power in 1997 was over £50 million.

The Government has recently announced details of a new scheme to encourage local authorities to support business growth by being allowed to keep some of the extra business rate revenue arising from growth. But according to an announcement by Minister Phil Woolas on 8th February, despite over 250 local authorities qualifying for the new scheme, South Gloucestershire does not qualify for a payment this year.

Steve Webb said:

"Businesses bring many benefits to our area, but they also bring costs. Councils in rapidly growing areas face big costs in providing the infrastructure for growth in terms of roads, public transport, planning and waste collection. Population growth also brings with it the costs of building new schools and community facilities.

"South Gloucestershire has expanded very rapidly for a long time but much of the fruits of that growth have been confiscated by Central Government and spent elsewhere in the country. The amount raided by the Government from local people since 1997 is more than the amount lost by the Bank of England in the recent heist. This is money paid by local businesses and it should be spent locally".

The MP will point out that South Gloucestershire already receives less money per child in its schools and per elderly person needing social services than almost any other authority, and that the rules on business rates "add insult to injury".

Click here to read Steve Webb's speech and the rest of the debate