Councils team up to keep millions of pounds

Updated: 12 January 2015

We are working with other local authorities to keep millions of pounds collected from local business rates in Hertfordshire...

Three Rivers District Council is working with other local authorities in Hertfordshire to keep millions of pounds collected from local business rates in Hertfordshire.

Under the existing arrangements, many local authorities have to pay a levy to central government on the income they receive from growth in business rates. The new Business Rate Pool, established by Hertfordshire County Council along with Broxbourne Borough Council, North Herts District Council, Stevenage Borough Council, Welwyn Hatfield Borough Council and Three Rivers District Council, will pool the authority’s income from business rates together as one rate paying body, which could see as much as £2.65 million retained and reinvested in the local area.

Three Rivers District Council’s lead member for resources, Cllr Matthew Bedford, said:

"Three Rivers has been working hard to make the area attractive for local businesses. Increasing our income from business rates can help us to maintain good quality services while keeping Council Tax low. We also welcome the benefits of increased employment and apprenticeships for residents."

Hertfordshire County Council’s Cabinet Member for Resources, Derrick Ashley, said:

"Recent changes by Government mean that a significant part of our budget in local councils is dependent on the amount of business rates we collect.

“The Pool will allow each authority involved to keep a greater proportion of their income from business rates and give more financial freedom and control of their income allowing them to plan better for the future.

“This is a prime example of how innovative thinking among public sector partners is leading to greater efficiency, saving money from the public purse. We are always looking for ways to get the best value for money without reducing the quality of service that residents receive."

Under the current arrangements, each of Hertfordshire’s district and borough councils collects business rate charges from owners of non-domestic premises, such as shops, restaurants, factories and offices, and pays a levy to Government on that income. 

These taxes are pooled centrally before being redistributed according to the needs of each area as determined by Government. By grouping the authorities together as a single entity the Pool pays a single, smaller levy to Government from the business rates it collects. This could allow councils in the Pool to retain as much as half the tax revenue from new businesses setting up and existing business expanding in their area.

The new arrangements would see more money retained locally and reinvested in Hertfordshire to create further growth. Calculations suggest that the Pool, comprised of Hertfordshire County Council and the five district and borough authorities, could generate as much as £2.65 million of additional funding in 2015/16 that would be allocated proportionately to provide services that benefit communities.

The Pool is comprised of just six of Hertfordshire's local authorities because this combination of income from rates allows for the greatest proportion of business rates to be retained. If all 11 of Hertfordshire's authorities were to join together they would hold on to less income from rates than they do currently.

More information about Council finances is available here...