Whitehall offering more power to cities over business tax rates

Whitehall is going to be negotiating deals with some of the biggest cities in the UK so that they will be able to have a greater amount of power in making decisions about public transport, raising funds, offering incentives for new business and organising the labour market in their local area.

The deal is going to involve eight cities which the governments regard as being at the core of the UK. These include Bristol, Birmingham, Liverpool, Leeds, Nottingham, Newcastle, Sheffield, and Manchester. Nick Clegg has recently stated that the reason for doing this is that he wants to see cities have a greater amount of autonomy and freedom as this should lead to a greater level of  innovation and efficiency.

It is hoped that the deals will be arranged before the budget is released in March and it is expected that a significant amount of money is going to be given to the cities to dispose of as they wish. It has been previously discussed that the rate at which business tax is set could be devolved to local governments. It is expected the detailed legislation about this will be released over Christmas and the law will come into force in 2013.

Currently business tax rates are determined by the central Treasury and are designed to protect areas with weaker economies. This means that some of the cities with weaker economies get back twice the income tax than they actually collect.

The way public transport will be organised is also changing and all cities will have to do in order to start a new public transport scheme is convince Whitehall that it is feasible. He expects that powers over transportation will be given to separate bodies, this would be very similar to the way the Transport for London is responsible for transport in the capital city.