Richard Harbord: Business rates reform still addressing many unanswered questions

Now the first consultation document on business rates devolution has been published, it is a good time for a moment’s reflection on the project and the progress made.

In short, the steering group, and its sub groups have worked very hard but their work is far from over.

There is no mistaking just how huge, significant and complicated this has all become. I have no doubt that when the then chancellor, George Osborne, stood up at the Conservative conference last year and made the announcement that started all this he did not think he was launching anything quite so complex.

The consultation paper expects responses by September. The process is very open with a genuine desire on all sides to get a large number of responses so that the package on offer can be refined.

This is a joint effort between the Local Government Association (LGA) and the Department for Communities and Local Government (DCLG), although the consultation paper itself was from DCLG only.

It had been discussed in draft by the relevant sub group and the steering group, but I think significantly all the groups are comprised only of officers and there has been to this point no political input from the LGA and their response will be the start of that.

There are still a number of sticking points. These are principally around the definition of “fiscally neutral”; what happens to additional burdens and growth in quantum; the final package of other services devolved to local authorities as part of the package; and the notion that not all services may be devolved to all authorities.

Indeed, there has been a great deal of discussion about the authorities who have already agreed a devolved deal which involves the devolution of business rate and how they should now be treated.

It has been confirmed (although I personally never thought otherwise) that the business rate will remain classified as a central government tax. This is mainly because they will set the basic poundage and the general parameters to be worked under.

Family tensions

The discussions and meetings are continuing. Some groups are meeting in August to finalise and work up their own response to the consultation, some groups like the “fairer funding “ group have an extended work programme which will stretch until 2018 and is , of course, totally central to the final outcome.

As a casual observer (I have been to the Steering Group and two of the sub groups) the inevitable difficulty has been that the participants all represent a different part of the local government family.

Therefore they have naturally been fighting the corner for the districts, counties, and combined authorities etc.

This is inevitable but it has meant on occasion that the best answer for local government as a whole may not have been reached.

This is, of course, a problem the LGA faces the whole time. It is very difficult, if not impossible, to satisfy everyone.

Workload

Following the referendum, there were fears that the volume of work faced by government would affect projects like this but the consultation paper came out on time and at present the work continues as planned.

There is a huge amount of work and legislation needed to make this all work.

In parallel, we await the government response to the consultation on the valuation side of business rates.

It seems certain that there will be more frequent (three-yearly?) valuations but there are still questions to answer. Could they be on self-assessment or Valuation Office Agency valuations and, very importantly, what rights will local authorities have on proposals and appeals?

Also, what shape will the appeals system take and will authorities still bear the risk of back-dated appeal losses?

This has been discussed at the working group, and options discussed, but the cost would have to be met from somewhere and that might mean top slicing the quantum.

For all these reasons it would be a real achievement to be ready to go in 2020. I note in passing that universal credit is entering its eleventh year of implementation, with the final date recently put back to 2021. It has also been unbelievably expensive and over budget. I am sure Paddy Power will offer odds on which of these major changes will be implemented in full first.

Richard Harbord is a consultant and a former chief executive of Boston Borough Council

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