The original ‘pooling’ system whereby all rates received by local authorities were paid into a national rating account either held by the Secretary of State for England or the National Assembly for Wales was replaced in 2013 by a system of local business rates retention.

The Business Rates Retention Scheme enables local authorities to keep half of any increase in business rates revenue.

Each local authority was provided with it’s starting position setting out the amount of business rates that the Government expected billing authorities in England to collect. This is known as the Estimated Business Rates Aggregate (EBR).

Local government keeps 50% of the locally collected rates with the other 50% paid to central government. The share kept by the local government constitutes the funding within the retention scheme.

To calculate the amount of funding within the local share the Government miltipled the EBR by the local share percentage of 50%. The remaining EBR is the central share, this is paid by local authorities to central government and then returned to fund local government through Revenue Support Grant.