£40 million boost for Shropshire Council in Osborne's business rates move

Council leader Keith Barrow said the move represented "a shining light at the end of a very dark tunnel", and would make a huge difference to the under-pressure authority.

George Osborne made the announcement at the Conservative Party conference on Monday, revealing that he wanted councils to retain £26 billion in revenue generated from business rates. Currently councils retain 50 per cent of business rates, with the rest going to Government.

Councillor Barrow welcomed the move and said the funding would mitigate the loss of the Revenue Support Grant from the Government.

The council has been drawing up financial plans based around the loss of the entire grant. However, it could now have £40m more than expected to provide services.

Councillor Barrow said: "It brings a bit of light to the situation because we were working on the principle that the revenue support grant would disappear by 2020 with nothing to replace it but the fact we will be able to keep the whole business rates is fantastic.

"On the face of it it means an extra £40 million of income for us.

"We were working on the principle we were going to lose the Revenue Support Grant anyway and we are doing all our financial remodelling on that basis so for us it would make a huge difference going forward."

He added: "The pressure on our budget as everyone knows is with safeguarding children and adult social care. This will take some of that pressure off those areas so I am exceptionally pleased."

Mr Osborne, said that the changes, planned to come into force in 2020, would mean councils no longer have to go to central government with a "begging bowl".

He described the proposals as "the biggest transfer of power in recent history".

Councillor Barrow also said that allowing councils to retain funds generated by business rates would encourage them to support and attract business, in an effort to raise more money.

He said: "Do not forget it is £40m at the moment and if we can attract more business between now and 2020 and raise the figure by getting more businesses into Shropshire then there is no ceiling.

"There is a huge incentive for us. We are already working on that with the new business park in Oswestry and Philip Dunne has contacted me saying there is an area in Ludlow they would like to develop."

Meanwhile, there are calls for the funding to be passed on to bigger town councils too.

Helen Ball, clerk of Shrewsbury Town Council and the larger councils champion, said: "Town councils like Shrewsbury spend a lot of their council tax budget on promoting town centre vitality, but we do not get a penny out of the business community as a result.

"Larger councils have lobbied government that a proportion of it should make its way down to town councils in that community for them to continue to promote the economic viability of their areas."

Mrs Ball said that the town council is currently paying for activities which promote and generate revenue for the town's businesses and tourism venues, but has to finance them from its own coffers.

She said: "In terms of business rates we are finding there are activities that Shropshire Council would have done in the town centre to promote tourism and the economic development which they are no longer doing. Their budget is decreasing so we are having to pick up the reins."