SOUTH Yorkshire Labour MPs have criticised Government plans spearheaded by Deputy Prime Minister Nick Clegg which would allow councils to keep business rates raised in their area.
Under the current system, to be scrapped, business rates are pooled centrally and redistributed based on need. Sheffield receives £60 million more than it raises at present.
But the Government wants to allow councils which boost economic growth to be rewarded with all the tax raised - and Mr Clegg has pledged the shortfall in cities like Sheffield will be made up with additional funding until the economy grows sufficiently to bring in extra rates.
During a Parliamentary debate on the changes, proposed under the new Local Government Finance Bill, Sheffield South East Labour MP Clive Betts said that, as unemployment rises, the benefits on offer from councils to those out of work would decrease.
Mr Betts, chair of the Commons Communities and Local Government Select Committee, said: “Local authorities will find their main source of income will actually go down at a time of economic difficulty, bringing instability to the heart of local government.”
The bill was passed with a Government majority of 100. It will now go into a committee stage to be debated in greater detail.