'Rates pool' plan set to unlock £1m
BUSINESS rates paid by firms across the city and Staffordshire will go into a shared pot as part of a union of six councils designed to prevent funds being swallowed up by Government.
Councils are drawing up plans for a 'rates pool' which could unlock an initial £1 million to be reinvested in the region's economic growth.
Cabinet members on Stoke-on-Trent City Council last night gave their backing to the scheme, which will give councils a cash incentive to attract new businesses.
Rates are currently paid directly to the Government and handed back to councils in a grant calculated using a strict formula.
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By forming a pool, councils will be able to take advantage of reforms allowing them to keep a share of income raised through economic growth instead of losing it to the Treasury.
Paul Shotton, the city council's deputy leader, said: "This will give real incentives for local authorities to stimulate growth."
Peter Bates, the council's assistant director of finance, added: "We'll benefit from retaining our own growth but also getting a share of the growth in the wider area.
"In the old world this £1 million would have to be sent back to the Government.
"It's the right approach. My only concern is that you still need to have to have growth.
"Whether you pool or stand alone, you need growth."
Councils which get less Government funding than income they raise from rates will no longer lose out.
And areas hit by a slump in rates will be able to lean on the pool to avoid a funding crash.
Leaders admit there is still work to be done to agree how the rates can be shared fairly across the region.
Stoke-on-Trent City Council, Staffordshire County Council, Newcastle Borough Council, Staffordshire Moorlands District Council, Stafford Borough Council, South Staffordshire Council and the county fire authority have all signed up.
Councillor Ian Parry, who oversees finance for the county council, said: "What we have to do is come to a sensible agreement about what to do with the pool and there will have to be some discussions about what kind of agreements we want to have about how the money is divided.
"Some areas will have greater scope for economic development whereas others won't and we'll have to have a reasonable and fair way of dividing it without one authority feeling they are not getting a fair share.
"The benefit is that by collaborating we are protecting the amount of money that can be retained locally."
Mike Stubbs, cabinet member for finance at Newcastle Borough Council, said: "As well as tackling cross boundary issues, we would also be able to share investment benefits and cushion the impact of fluctuations in rates income."
Communities Secretary Eric Pickles said: "The centralised approach means there is currently no real financial incentive for local authorities to promote growth."