Background briefing paper on reviewing and reforming local government finance

This note explains the current debate on reform of local government finance in England. This includes a description of how business rate retention works; the Government’s proposals for changes to the system; and the progress of the Government’s Fair Funding Review. It also includes a section on the ‘fundamental review’ of business rates announced in 2020.

The policies covered in this note have effect in England only. Responsibility for business rates, and for local government generally, is devolved to Scotland, Wales and Northern Ireland. For a more general explanation of the business rates system in England, see the Library briefing paper Business rates. For more details on the 2017 revaluation of business rates in England, Wales and Scotland, see the Library briefing paper Business rates: the 2017 revaluation.