The Isle of Wight will have more control of its own financial future following a government announcement.
The Isle of Wight Council, Portsmouth City Council and Southampton City Council will be allowed to keep 100% of business rates collected in each area as part of a national trial. At the moment local areas keep only half, with the rest of the money going to central government.
If the local economy grows, and more business rates come in, then the councils will be able use the extra money to offset recent spending cuts, and invest in areas such as transport, housing and flood defences.
Secretary of State for Communities and Local Government, Sajid Javid, announced the 3 Solent councils will be part of the year-long trial along with 9 other areas in the country.
In return for the extra funding from business rates, the councils will each give up an equivalent amount of funding received annually from central government. But they will keep all growth in business rates.
These changes give councils greater control of their own finances by having the opportunity to generate more income through growing their local economy. This could help reduce the impact of reductions in government funding to local councils.
The government has pledged that no council will be worse off through these arrangements. But there is the potential for areas to be better off as they can keep any extra money generated through business growth.
The Leader of Isle of Wight Council, Cllr Dave Stewart, said:
“This is great news for the Island and the two cities. This is a pilot scheme, meaning we are not at risk of losing money. The government are effectively underwriting the arrangement.
“From the Island perspective, we recognise we have an opportunity here to work in partnership to help address our local financial challenges through this arrangement.
“We have ambitious and realistic plans to deliver a sustainable, economic-led regeneration on the Island and extra money raised from business rate growth will benefit both residents and businesses alike.
“With initiatives such as our digital economy, apprenticeship development and skills growth, as well as encouragement for investment on the Island, we are already showing how we can add value to the Solent Local Enterprise Area, without undermining our unique Island status.”
The trial will initially last for a year, starting in April 2018.