Millions of pounds paid in rates by Peterborough firms could be spent locally after the city was included in a pioneering scheme.
Peterborough City Council is one of just a few local authorities set to benefit from a three-year scheme unveiled in yesterday’s budget by Chancellor George Osborne.
Additional income will be used to invest in the city and to protect frontline services for our residents.Marco Cereste
The move was described as ground-breaking by council leader Councillor Marco Cereste.
Under the scheme, the council will keep all the business rates it raises above its agreed target figure of £96 million over 2015/16.
Traditionally, the council’s collection of business rates has increased by 0.3 per cent to 0.5 per cent annually over the past few years as firms move into the city.
If the council’s business rates increase by one per cent annually, it will raise £2.2 million more during the scheme.
Currently, business rate revenue is shared equally between central government and the local authority.
Now, if the council exceeds its own target it will keep all of the extra money. The target figure goes up by 0.5 per cent every year during the three years.
Cllr Cereste said: “This deal means that more money generated by our growing city will now be spent locally.
“Additional income will be used to invest in the city and to protect frontline services for our residents at a time of reducing resources.”
Steven Pilsworth, service director, financial services at the council, said: “We would like to make a success of this in order to make it permanent.
“This is a stretch target but we hope to meet and exceed it.
He added: “What’s important is there is no penalty if we do not hit it.”
Labour’s Peterborough parliamentary candidate Lisa Forbes said: “I’m broadly in favour of this, but it’s a Labour policy. It’s in our manifesto to devolve £30 billion of funding.”
Liberal Democrat North West Cambridgeshire candidate Nick Sandford said: “Our party has always advocated local authorities having more control over their incomes.”
John Bridge, chief executive of Cambridgeshire Chambers of Commerce, said: “This is very positive news. The council has provided exceptional growth.”