LGA responds to DCLG consultation on business rates retention

Responding to the Department for Communities and Local Government consultation on business rates retention published today, Cllr Nick Forbes, Senior Vice Chair of the Local Government Association, said:

"This Government consultation is an important step on the road towards further retention of business rates, something which has been long called for by local government. It poses a series of open questions and it is important that the views of councils are heard and central in shaping how the new system works. This is vital to ensure it maximises the potential it offers to our local communities and businesses.

"It is important for the new system to be implemented in a way which balances rewarding councils for growing their local economies but avoids areas less able to generate business rates income suffering as a result.

"Decisions over which grants and responsibilities councils will have to pay for from any extra business rates income are also crucial. As well as consideration of the grants and services listed in this consultation, councils are keen that any new responsibility they agree to take should support their vital role in driving economic growth. Handing over responsibility for skills and transport services is the most logical fit as it would allow local areas to close skills gaps, improve public transport and boost local economies.

"Councils do not want responsibility for administering the Attendance Allowance benefit for older people. Responsibility for administering it would create significant cost pressures for councils whose budgets are already under significant strain. That is because cost pressures and applications for demand-led services like Attendance Allowance can go up very quickly whereas it can take much longer for local areas to generate business rates income.

"We are pleased the Government has committed to funding existing responsibilities and any new responsibilities devolved. Government also needs to allow councils to use some of the extra business rates income to plug existing funding gaps and give the power to increase business rates to all areas and not just to those with directly elected mayors.

"Councils have been forced to divert at least £1.75 billion from stretched local services in the past three years to cover the risk of backdated appeals – of which they have to cover half the cost at present. Under localised business rates, local government could be liable for 100 per cent of the cost of successful appeals. Improvements to the appeals system are also essential to avoid the need for them to divert such significant sums of money that could otherwise be invested into local services."

5 July 2016

On the Day Briefing: The Government's consultation on business rates retention

Greg Burns
Deputy Head of News and Internal Communications
Local Government Association
Phone: 020 7664 3184
Email: greg.burns@local.gov.uk