LGA responds to publication of draft Local Government Finance Bill

Media release 13 January 2017

Responding to the publication of the Draft Local Government Finance Bill, Cllr Claire Kober, Chair of the Local Government Association's Resources Board, said:

"This draft Bill is an important step on the road towards local government keeping more of its business rates income, something which has long been called for by councils.

"With local government facing an overall £5.8 billion funding gap by 2020, it must be able to use its extra business rates income to plug this growing gap. Councils should then be able to invest the rest into services which support local economies and drive local growth, such as closing skills gaps and improving public transport.

"The localisation of business rates will have to be underpinned by a proper needs assessment. This is vital to ensure councils are rewarded for growing their local economies while checks and balances compensate areas less able to grow their business rate base.  

"Provision in the Bill to allow for government to pay local authorities for the cost of business rates appeals is positive. Reforming the business rates appeals system is essential to protect councils from the growing and costly risk of appeals. Councils have been forced to divert £2.5 billion over the past few years from local services to cover the risk of paying half of appeals and refunds over the past five years. This reform has to happen before local government keeps all of its business rates income as this could mean it is liable for 100 per cent of refunds.

"Councils can do more to support small businesses and boost high streets with the freedom and finance to set business rates and reliefs locally and all local areas need the power to be able to increase, as well as decrease, business rates - not just those with directly elected mayors.

"We look forward to working with Parliamentarians to shape the Bill and continue to work alongside government and councils on how the new system can work effectively and maximise the potential it offers to our local communities and businesses."

31 January 2017

Greg Burns
Deputy Head of News and Internal Communications
020 7664 3184


Read the draft Local Government Finance Bill, which enable a move to localised business rates.

Read our briefing for MPs