Title

FINANCE

Budget 2016: Business rates blow for local government

Local government faced a further potential blow to its finances in the Budget with the news that business rate relief will be extended permanently.

Local government faced a further potential blow to its finances in the Budget with the news that business rate relief will be extended permanently.

As local government funding shifts from being largely funded by central government grant, to being supported by locally raised cash including business rates, the Chancellor announced the threshold would ‘more than double'. 

According to the Chancellor's calculations, 600,000 businesses will pay no rates at all from next year as a result. 

Mr Osborne told Parliament: ‘When I became Chancellor, 80% of local government funding came in largely ring-fenced grants from central government. It was the illusion of local democracy.

‘By the end of this Parliament, 100% of local government resources will come from local government – raised locally, spent locally, invested locally.' 

The Greater London Authority is set to lead the way, with taking on devolved business rates from next April, three years early. 

In addition, Mr Osborne suggested there would be a further cuts of £3.5bn to public spending by 2019-20 in a ‘further drive for efficiency and value for money'. 

He told parliament: ‘At less than half a percent of government spending in four years' time, that is more than achievable while maintaining the protections we have set out.

‘At the same time we will continue to deliver sensible reforms to keep Britain living within its means.' 

However, the budget did see some more positive news for local government, with three more devolution deals announced. 

For public health, the Chancellor put forward plans for a tax on sugary drinks to pay for sports in schools. 

In a Budget billed as a budget that puts the next generation first, he said: This is a Budget that gets investors investing, savers saving, businesses doing business; so that we build for working people a low tax, enterprise Britain; secure at home, strong in the world.

‘I commend to the House a Budget that puts the next generation first.'

For the Budget documents, see here

For George Osborne's speech, see here 

FINANCE

Why the planning system must protect our green spaces

By Baroness Sater | 13 October 2025

Baroness Sater says the Planning and Infrastructure Bill fails to recognise the threat posed to community green spaces, and she sets out three areas where co...

FINANCE

Talking opportunities

By Dr Helen Paterson | 13 October 2025

Dr Helen Paterson believes that while the sector faces real challenges, it must still make space for dialogue with government about the opportunities council...

FINANCE

Budget deficit warning over two unitary plan

By Joe Lepper | 13 October 2025

One of two unitary authorities proposed for Warwickshire amid local government reorganisation ‘would exist with a budget deficit from day one’, a report has ...

FINANCE

Reorganisation could break care services unless government gets reform right

By Cllr Matthew Hicks | 10 October 2025

New analysis raises serious concerns for the future sustainability, quality and cost of people-based services if excessive fragmentation into smaller council...

Heather Jameson

Popular articles by Heather Jameson