Business rates consultation elicits calls for more work
0CIPFA has this week become the latest body to respond to the government’s consultation on business rates.
It called for there to be greater support and clarity for local authorities during business rates transition, while acknowledging that the reform could be a step towards greater financial devolution.
Joanne Pitt, local government policy advisor at CIPFA, said: “Business rates reform will help councils shape their areas and generate economic growth by giving them greater control over their finances – however there is far more work needed to ensure these reforms land successfully.
“These reforms will bring additional risks into local government which must be carefully managed.
“Key to the success of this reform will be ensuring that the linking of local government funding with business rates does not negatively impact local authorities, as it is implicit in the scheme that a fall in business rates would lead to a fall in local authority income.”
Last week the County Councils Network (CCN) said in its response to the government’s consultation on business rates retention that it supports the idea of a full baseline reset when 75% retention is introduced.
The CCN called for a phased reset after that date, given the government’s determination not to take a further full baseline reset after 2020/21.
It would like the full baseline reset to coincide with the outcome of the Fair Funding Review.
“Many authorities are currently benefitting excessively from the business rate system and a full baseline reset is an effective way of creating a fair distribution of these gains ahead of the new settlement for the sector at the Spending Review.”
It also called for there to be a default tier split between counties and districts.
It is open to exploring a joint proposal on this with the District Councils Network (DCN), but says that it does not want the existing 4:1 split to be used as a baseline for its reformulation, which it thinks would be unfair on the counties.
The DCN last week called for any revision to the split to be limited to the additional 25% of retention being added to the existing 50%, and for the existing split to be kept for the first 50%.
The CCN backed the government’s proposal for the levy on growth to be retained, again with the aim of redistributing resources away from high-growth (and largely non-county) areas.
The CCN, however, dislikes the suggested threshold of 150%, which it said would render the threshold almost meaningless, and suggested instead a threshold of 20% of Baseline Funding Levels.
The Local Government Association (LGA) has also commented on business rates retention, in response to the report from the Housing, Communities and Local Government Select Committee on the future of high streets.
The LGA wants online businesses to pay their fair share of rates, and for measures to be taken against retailers who avoid paying business rates.
