Kingston is set to keep a greater share of business rates and have greater power on how it is spent from April next year, if plans to take part in a London wide pilot are approved at Full Council on 12 December.
Kingston Council currently collects around £85m in business rates across the borough and the new pilot will mean it will retain and benefit from approximately an additional £1.7m per year. The London wide pilot will enable local authorities to have direct control over the money collected and use it to invest in public services in their borough as they see fit.
Last Spring, the Government published a devolution deal for London that challenged the Mayor and London boroughs to agree a scheme that would give them greater control of business rates generated in the capital which was agreed by the 32 London boroughs and the City of London.
This is an important step towards bringing London in line with most other global cities by allowing the capital’s government control over a much wider range of taxes, in exchange for lower levels of government grant.
Cllr Kevin Davis, Leader of Kingston Council, said: “It was in 2014 that we first proposed to the then Chancellor, George Osbourne, that we exchange our diminishing grant for a greater retention of business rates so we are pleased at this step towards a much fairer deal for the Royal Borough. Using this additional funding, we can directly re-invest it back into our local economy and use it to benefit Kingston residents but it also means that we will derive a greater share from growing our local economy in the future.”
Currently business rates are set nationally, but collected locally. Since 2013, arrangements have been in place to allow authorities to retain a limited amount of the increased revenue arising from rates growth in their area. There has been a growing call, led by Kingston, for these arrangements to be extended, and for business rates to be fully devolved to councils.
Under the new plans, London would retain a greater share of business rates in exchange for giving up Revenue Support Grant (RSG). Currently in London, the Government retains 33% of the total collected, and redistributes that nationally, through the RSG system. The remaining 67% is retained locally with the boroughs receiving a headline figure of 30%, and the GLA 37%. The GLA share was previously 20%, until a recent change with Transport for London (TfL) grant being replaced by an increased share of rates being passed to the GLA.