Business rate group set to see first reports on devolution progress
0Working groups are set to report back on progress to the steering group set up by government and councils to shape the future system of devolved business rates.
The Business Rates Retention Steering Group was established jointly by the Local Government Association and Department for Communities and Local Government.
This week (Friday, 13 May) will see the second monthly meeting of the group, which is made up of a mixture of DCLG officials along with section 151 and revenue officers from local authorities.
One of those involved with the process told Room151: “It will be interesting to see what happens.
“At the initial meeting there was some disagreement between richer and poorer authorities about the need for a robust safety net for less well-off councils.”
In October, chancellor George Osborne announced that councils will be able to retain 100% of business rates from 2020, with the abolition of revenue support grant.
Three working groups have been established by the steering group to chew over issues and come up with potential solutions to make the new system work.
The first, will look at the design of the new system. The second, on fair funding, will examine the reset of existing needs assessments to create a fair baseline for the new system, as well as potential methods for redistributing rates between higher and lower performing area.
The third will cover alternative services that could be devolved from central government to local government to ensure that the changeover to the new system remains fiscally neutral.
Another set of subgroups will cover technical issues including a new appeals system and the impact of business rates relief for small businesses.
The steering group is expected to report back to government in July, with the DCLG planning to publish discussion documents setting out ideas for the framework in the summer.
It is hoped that legislation to introduce the changes will be published soon after.
Sean Nolan, senior local government advisor at the Chartered Institute of Public Finance and Accounting, said: “We fully support greater financial autonomy for councils through the introduction of 100% retention of business rates. It’s important that decisions are made through an inclusive, collaborative approach across the whole of the sector.
“However, the long-term opportunities come with short-term challenges.
“In particular, any solution must be clear on how high-need authorities, who currently have a net reliance on central funding, will be supported. It must also set out how councils should deal with business rate volatility and risk.”
An LGA spokesperson said: “The move towards 100 per cent business rates retention heralds a major change to the way local government is financed and achieving it will require a radical overhaul of the local government finance system.
“It is vital that the voice of local government is central to setting out all the issues and designing this new system.”
Simon Edwards, director of the County Councils Network, said: “Getting the needs-based review of funding right, and properly accounting for counties’ current and future needs, pressures, and growth, will set the template for a sustainable rates retention system that delivers for all.”
Councils and other interested parties can feed into the work of the steering group by emailing businessrates@local.gov.uk.
