Government plans to let councils retain business rates and borrow against future rate income should provide an incentive for authorities to encourage local business growth, according to the British Property Federation (BPF). The BPF has welcomed the new proposals, but called on Government to ensure councils have certainty about future income or the plan risks becoming a “damp squib”. The proposals, announced by Local Government Secretary Eric Pickles, are aimed at shifting councils away from their dependence on Government grants. Councils would get access to a series of tops up if their rates income falls below a baseline. Councils such as those in local enterprise partnerships, or districts and counties, could voluntarily pool business rates to enable the wider economic area to benefit from growth and reduce any volatility. The Government said the scheme will mean no changes in rates charged to businesses or how they are collected. BPF chief executive Liz Peace said: “The property industry strongly supports Government plans to allow local authorities to retain a share of the growth in business rates in their area. This should give councils a greater incentive to promote local business growth. Indeed, developers see it as one of the most positive steps that Government could take to back sustainable development.” However, Peace added: “It will only work if the system gives local authorities long-term certainty about the additional income they will receive. If those who achieve growth see their rewards watered down too much as a result of Government caution then this could end up as nothing more than a damp squib.” The BPF also welcomed Government’s commitment to introduce Tax Increment Finance, which are aimed at letting authorities pay for future infrastructure developments by letting them borrow against projected rate growth. But the BPF repeated its call for the policy to be introduced as a matter of urgency rather than through the Local Government Resource Review, which will not come into effect for several years. Peace said: “Government could get TIF underway much more rapidly than the current target date of 2013. It is perhaps inevitable that the benefits of local retention generally will take many years to percolate through, but if the Government wants to see growth happening it should grasp the nettle and authorise TIF schemes to get underway now – not in two years’ time.” Legislation outlining more details of the Government’s plans are due to be released later this year.