The Communities and Local Government Committee has today launched
an inquiry into the impact of the longer implementation period
for 100% retention of business rate revenue amid uncertainty for
councils about what happens when their current funding
settlements come to an end in 2020.
The inquiry follows on from, and seeks to complete, an initial
inquiry by the previous Committee on 100% business rate retention
which also explored which responsibilities councils could take on
in return for the increase in revenue. It made various
recommendations in its interim report about how 100% business
rate revenue should be implemented.
The new funding system was originally due to be implemented in
2019-20, with the Revenue Support Grant (RSG) phased out and
councils taking on new responsibilities in return for the
increase in their business rate revenue.
However the Local Government Finance Bill, which contained
provision for 100% retention, fell when Parliament was dissolved
for the General Election. It was not revived in the Queen’s
Speech but the Government has confirmed it is still committed to
the reforms.
The new inquiry will assess the implications of the extended
implementation period and how it is affecting councils’ financial
planning.
It will also examine the consequences of implementing the Fair
Funding Review - the Government’s review into needs and
redistribution – in 2020-21.
MP, Chair of the Communities
and Local Government Committee, said: “The
proposal to allow authorities to retain 100% of revenue raised
from business rates is a significant reform to local government
finance.
The Secretary of State told us last month that, although the
Government still intends to push ahead with the policy, it will
be delayed from the original schedule. This will undoubtedly have
an effect on how local councils make future financial
decisions.
We’re keen to explore some of these impacts and also examine
how the outcome of the Government’s Fair Funding Review in
2020-21 will affect councils.”
Written submissions – terms of reference
The Committee is inviting written submissions in relation to the
points below:
• What are the consequences for councils of the longer
implementation period for 100% retention in the context of the
four-year settlement?
• What are the consequences for councils of implementing the
outcome of the Fair Funding Review in 2020-21?
• How are these changes to the original implementation schedule
affecting councils’ financial planning from 2020 onwards?
The closing date for submissions is 14
December.
