Birmingham council is set to keep £441m of business rates in the coming year.

Latest government figures have forecast that our council will raise £441,483,827 in rates in 2019/20.

The tax is levied on non-residential properties such as offices, shops and factories.

The forecasted amount is nearly £19m more than the amount Birmingham council were expected to raise between April 2018 and the end of March this year - suggesting that businesses are booming in our city.

The total expected to be collected in 2019/20 works out as £371 for every man, woman and child in Birmingham.

Our council is among just 27 in England that will get to keep all of the business rates they raise in 2019/20.

Birmingham Council House

The government had originally committed to giving 100% of business rate revenue to all councils by the end of 2020, but that plan has since been abandoned.

Instead, they aim to give 75% of business rates to all councils by the end of 2021.

Some 108 councils that had been retaining 100% of their business rate income in 2018/19 have since had this reduced. 

Now 138 councils are currently trialling a 75% retention rate, while the remaining councils in England get to keep half of the money.

The rest is pooled and then redistributed by Whitehall as the Revenue Support Grant, which is also known as main government grant funding.

Councils that get to keep more of their business rates will receive less from the grant doled out by central government.

However, this grant has also been cut year on year, meaning the government has been giving less and less of the amount they collect back to councils.

They plan to phase it out entirely this year, meaning many councils will face a funding shortfall until the 75% retention scheme is fully rolled out a year later.

 

The amount retained will also replace other existing grants.

For example, councils receive around £3bn each year in a ring-fenced Public Health Grant. Under these plans they will no longer receive that grant but will be expected to pay for it out of the extra business rates income they keep.

Experts argue that councils should be able to use extra business rates income to plug funding gaps, not to replace already existing funding streams.

 

A Local Government Association spokesperson said: “The money local government has to maintain vital services is running out fast, with councils in England facing an £8 billion overall funding gap by 2025.

“It is vital that we maximise the potential that the further localisation of business rates offers to our local communities and businesses.

“Allowing local government to keep every penny of business rates collected to plug funding gaps is the best way the government can ensure local authorities are able to protect the services communities rely on into the next decade and beyond.”