• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

LGA changes tack on business rates retention

0
  • by Colin Marrs
  • in 151 News · Funding
  • — 29 Jun, 2017

Sajid Javid MP

The Local Government Association says that local authorities must be granted 100% business rate retention—without taking on new responsibilities.

The position is a shift from the LGA’s previous line, which agreed with the government’s stance that the extra money retained must be accompanied by new service responsibilities.

However, in the wake of the government’s decision to drop the Local Government Finance Bill, the LGA has updated its position saying that the focus must be on allowing councils to use the money to fill the existing £5.8bn gap in local government finances.

In a statement, the LGA said: “Business rates are an extremely important source of income for local government and with an overall funding gap of £5.8bn expected by 2020 the government must commit to moving forward with vital reforms.

“It was hugely concerning that the government did not reintroduce the Local Government Finance Bill in the Queen’s Speech. The Bill was setting out the framework towards allowing local government in England to keep all of the £26bn in business rates it raises locally each year and providing powers for mayoral combined authorities and the Greater London Authority to raise an infrastructure supplement.

“The government needs to commit to working with local government on how reform can be achieved within existing powers and recognise that the full amount of revenue raised through business rates is needed to properly fund existing council services.”

The reasons for the LGA’s shift in emphasis is unknown.

However, recent announcements, including the government’s deal with the Democratic Unionist Party to provide £1bn for infrastructure investment, may signal that the government is moving away from its previous policy of austerity.

In February, the government said that in return for 100% control over business rates, councils would have to take on responsibility for services covered by revenue support grant, rural services grant and the public health grant. Other services had been under consideration for inclusion in the deal.

Last week, the government announced that it would not bring forward the previously-planned Local Government Finance Bill, which was due to grant councils the right to retain 100% of business rates income. It has also halted most of the activity on the steering groups which were examining how the proposals were to be implemented.

Work on a fair funding formula to work out how to ensure poorer councils are not left behind, is set to continue.

Some in the sector believe that this is a sign that the government is still committed to devolving business rates, but may tackle it through an executive order.

Andrew Burns, director of finance and resources for Staffordshire County Council, and incoming president of the Chartered Institute of Public Finance and Accountancy, said: “Potentially the Treasury could use some of the business rates retained by Treasury to give it back to local authorities in such a way that it gives them extra resources to deal with social care issues.”

This week, Basildon council’s new chairman of policy and resources committee, Gavin Callaghan, wrote to communities secretary Sajid Javid, saying: “The changes included in the former Bill – those for example relating to rate appeals and the central list – could perhaps be addressed in different ways, rather than dropped altogether. The existing BRR scheme provides for a reset anyway, so I am hopeful that the best can be made of the scope for amending baselines and introducing new freedoms.”

But he also called on the government to make a statement on business rates retention as soon as possible, to clear up uncertainty.

He said it was “imperative that you make an early announcement to provide clarity and certainty.

“The ambiguity at the present time seriously affects financial planning for Basildon and for each local authority, and some reassurance would be very helpful. As a minimum, can authorities still rely on the four-year settlement figures in the last spending review and the associated ‘guarantee’?”

Even if the government progresses some elements of the proposals through executive order, it would still have to legislate to allow councils to discount business rate levels and to allow city regional authorities to raise extra business rates income for infrastructure.

One source, who wanted to remain anonymous, said: “I wouldn’t want to be the officer going to tell Andy Burnham (mayor of Greater Manchester) that he doesn’t have any money to spend on infrastructure next year.”

Get the Room151 Newsletter

Share

You may also like...

  • Brexit fears hit council property investments as contingency funds confirmed Brexit fears hit council property investments as contingency funds confirmed 31 Jan, 2019
  • Spring budget 2020: Improved prospects for councils though uncertainties remain 12 Mar, 2020
  • LGPS to see launch of cost comparison site in 2020 LGPS to see launch of cost comparison site in 2020 4 Sep, 2019
  • ‘Clarity needed’ on LGPS pool arrangements under surprise competition rules ‘Clarity needed’ on LGPS pool arrangements under surprise competition rules 20 Jun, 2019

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 hours ago

    Could 2021 be less eventful for LGPS, please?: Barry McKay looks at McCloud, the 95k exit cap, employer risk and investments to see what to expect for LGPS in the coming year. On one hand, 2020 was in[...] dlvr.it/RtslFd pic.twitter.com/H4debuPmGG

    Room151 2 hours ago

    Fixed income investing can help target both financial and sustainability targets: Sponsored article: Adam Whiteley offers a guide to the ESG benefits of investing in fixed income. Investing responsibly in fixed income can be crucial for local government… dlvr.it/Rtsl9h pic.twitter.com/khJL1xNfGh

    Room151 1 day ago

    Going beyond the standard metrics for climate change: Sponsored article: With climate change an investment imperative and an imminent reporting requirement, Ritesh Bamania argues UK pension schemes should look beyond today’s standard metrics. With… dlvr.it/RtnpLS pic.twitter.com/6ABaFHyS9I

    Room151 2 days ago

    LGPS webinar: Governance the key to TCFD implementation: LGPS funds have been warned that governance is it at the here of Whitehall plans to impose a new climate reporting regime on pension funds. In January the Department for[...] dlvr.it/RtjwNq pic.twitter.com/YMiMdmRyzU

    Room151 2 days ago

    LGPS webinar: Central bank management of bond purchasing could affect all asset classes: When the government debt caused by the pandemic is eventually tackled there may be a huge impact on assets of all classes, according to a leading investment expert… dlvr.it/RtjwJx pic.twitter.com/7v8K5vMYHo

    Room151 2 days ago

    #LGPS readers...what to do about #bonds? room151.co.uk/blogs/lgps-web… @BrunelPP 's new CIO, David Vickers tackles a problematic area #centralbanks #assetallocation #fixedincome pic.twitter.com/yUJr0azbKv

    Room151 2 days ago

    LGPS Challenges: Balancing Realpolitik and responsible investment: Elizabeth M. Carey warns of the perils of an ESG echo chamber as countries outside the West continue to invest in fossil fuels. Anyone working with the LGPS probably feels[...] dlvr.it/RtjMpq pic.twitter.com/MykIYxuYri

    Room151 6 days ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 6 days ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 6 days ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

    Room151 1 week ago

    What role will climate change have on the pricing of government bonds?: Sponsored article: Kerry Duffain finds that “vulnerability and resilience to climate change” have a significant impact on the cost of government borrowing. Ardea Investment… dlvr.it/RtNKv7 pic.twitter.com/wDjT31x4Yt

    Room151 1 week ago

    ESGenius: Slashing emissions will fuel green growth for decades: Sponsored article: Velislava Dimitrova argues that a big enough investment could mean transition to a low, or no, carbon economy can become a reality. The world needs to slash carbon[...] dlvr.it/RtKZJp pic.twitter.com/cd8S3ijERl

    Room151 1 week ago

    Prudential code: “Not perfect, but its heart is in the right place”: The new Prudential Code offers revised rules for borrowing. Nikki Bishop is sceptical it will work while Gary Fielding offers his support. Nikki Bishop I have been asked to give[...] dlvr.it/RtKZFh pic.twitter.com/OriN28lXcb

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Guy Ware: Are there reasons to be cheerful after the Queen’s Speech?
  • Next story News round-up: Uncertainty over funds for cladding, Birmingham’s energy company

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.