Responding to the launch of the Government’s fundamental
review of business rates as part of Budget 2020, Cllr , Chair of the Local
Government Association’s Resources Board, said:
“Business rates account for around a quarter of all council
spending power. Money raised is used to pay for vital local
services, such as caring for older and disabled people,
protecting children, fixing potholes and collecting bins.
“Any reform must therefore recognise the importance of this
income stream for funding key local services.
“Councils want to see a reformed business rates system
which commands confidence. It does need to be modernised and
improved, for example to ensure that sectors such as online
businesses make a fair contribution. The risk of appeals on
councils need to be reduced and tougher powers are also needed
for them to tackle business rates avoidance.
“Urgent clarity is also needed on how the Government’s
fundamental review of business rates will impact on reforms to
allow local government to keep more of business rates income
collected locally from next year.
“We urge the Government to work closely with the LGA and
councils so local government forms a central part of this review.
The impact on how local services are sustainably paid for must be
one of its central considerations.”
NOTES TO EDITORS
Councils do not set business rates - they simply collect
the tax. They have little control over how much a business pays
as the bills, as well as most discounts and reliefs, are set and
paid for by central government.
Collectively, councils currently keep half of the business
rates collected in England, and this is shared to help councils
that are less able to generate business rates. The amount of
business rates income kept by local government nationally is
proposed to increase to 75 per cent from April 2021. This is
happening at the same time as central government funding to
councils is phased out. As a result, funding for local services
will be even more intrinsically linked with business rates and a
source of funding that councils have no control over.
