Lib Dems welcome moves to break power of Whitehall

Today's announcement by the Deputy Prime Minister, Nick Clegg, that local authorities will be given back control of business rates has been warmly welcomed by Cllr Richard Kemp, Leader of the Liberal Democrats in Local Government.

"This will be a significant step in returning power to local communities. It is something that the LGA, on a cross-party basis, has been wanting for a long time now.

"And Liberal Democrats were also very pleased to hear that there will be protection for more deprived areas - we had a cast iron assurance that no local authority will receive less funding than they do at the moment when the new rules are introduced".

Cllr Kemp also warmly welcomed the announcement that Tax Increment Financing is to be introduced for all councils, giving authorities the freedom to borrow against business rate income; also something the LGA has been supporting.

"These are major steps forward for genuine local control and choice", he added.

Nick Clegg said:

"Every Government preaches localism. This Government will practice it. In terms of real decentralisation, money talks.

"We need to reverse decades of centralisation to make our communities masters of their own economic destinies.

"We have to create the conditions for communities to invest in their own success. That means putting our money where our mouth is to give you proper power over spending as well as more control over the tax you raise and keep so, for example, you can fight for businesses to come to your town.

"You know we'll shortly be publishing detailed proposals for consultation. I can also confirm we will follow that consultation with a Local Government Finance Bill, so that this power shift is set in statute.

3 Key Points

1. "We will localise the retention of business rates. No ifs, no buts, no maybes. You currently control less than half your budget. With rate retention, it could become 80 per cent or more."

2. "I guarantee any new system will be fair. More deprived areas will not lose out. From the start, no authority will receive less funding when the new arrangements are introduced than they would have done previously."

3. "Will introduce Tax Increment Financing. Freedom to borrow against business rate income helping to unlock the development potential of their areas and increase Councils' income."

"You asked for new borrowing powers and to be given back business rates - we're delivering it. You've told us you want change but any reform must be fair - we've heard you. But now it's up to you to help us make this work. We have an unmissable opportunity here. If we get this right we can win the argument for localism once and for all."