By Richard Johnstone | 9 January 2012
Council funding reform will be a ‘wasted opportunity’ if ministers continue to exert control over business rates, local authorities in London warned today.
London Councils, which represents the capital’s 33 boroughs, said that the government’s ‘overly complex’ plans to allow councils to retain business rates should be reconsidered.
The group’s call for the plans to be revised comes ahead of tomorrow’s Commons debate on the Local Government Finance Bill. It also follows concerns raised by the Special Interest Group Of Municipal Authorities that the scheme could disadvantage areas that face sudden increases in the need for council services.
While London Councils supports the retention of business rates, it is unhappy that the current proposals do not give councils all future increases.
A system of top-ups and tariffs will operate at the start of the new scheme to minimise any excessive gains and losses. There will also be a levy on any future increase in rate revenue that is deemed disproportionate by government.
The Department for Communities and Local Government plans to set individual levies for each council.
This would leave ‘too many mechanisms which are under Whitehall’s grip’ when the new system is implemented by April 2013, London Councils said today.
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The group wants MPs to back its call for councils to keep a greater share of any growth in business rates as a result of attracting more businesses, to provide a growth incentive.
It has also called for greater financial benefits for any authorities that choose to work together and pool resources. Such an arrangement is being examined for London.
Chair Jules Pipe said: ‘We have a real opportunity to reform a system which everyone admits is far from perfect, but this Bill has created a highly complex system which will create unpredictability, and denies authorities the benefits of rising local income from new and growing businesses.
‘We need strong and fair incentives for all local authorities so that we can work together to foster economic growth and create jobs that benefit the whole of London and the wider UK economy.’
The group is also concerned about the plans to localise Council Tax Benefit, contained in the Bill.
This would transfer the cash for the benefit to councils, but only after it has been cut by 10%. Councils would then decide on local eligibility criteria.
London Councils warned that the change would cost millions of pounds to operate. The 10% cut would also leave each council with an average annual gap of £2m, which could leave them with no alternative but to either reduce support or make up the shortfall in funding with other cuts.
London Councils called for the benefit to merged into the planned Universal Credit, which will combine benefits such as Jobseeker’s Allowance, Employment Support Allowance and Housing Benefit from October 2013.
Council funding reform will be a ‘wasted opportunity’ if ministers continue to exert control over business rates, local authorities in London warned today.
London Councils, which represents the capital’s 33 boroughs, said that the government’s ‘overly complex’ plans to allow councils to retain business rates should be reconsidered.
The group’s call for the plans to be revised comes ahead of tomorrow’s Commons debate on the Local Government Finance Bill. It also follows concerns raised by the Special Interest Group Of Municipal Authorities that the scheme could disadvantage areas that face sudden increases in the need for council services.
While London Councils supports the retention of business rates, it is unhappy that the current proposals do not give councils all future increases.
A system of top-ups and tariffs will operate at the start of the new scheme to minimise any excessive gains and losses. There will also be a levy on any future increase in rate revenue that is deemed disproportionate by government.
The Department for Communities and Local Government plans to set individual levies for each council.
This would leave ‘too many mechanisms which are under Whitehall’s grip’ when the new system is implemented by April 2013, London Councils said today.
.
The group wants MPs to back its call for councils to keep a greater share of any growth in business rates as a result of attracting more businesses, to provide a growth incentive.
It has also called for greater financial benefits for any authorities that choose to work together and pool resources. Such an arrangement is being examined for London.
Chair Jules Pipe said: ‘We have a real opportunity to reform a system which everyone admits is far from perfect, but this Bill has created a highly complex system which will create unpredictability, and denies authorities the benefits of rising local income from new and growing businesses.
‘We need strong and fair incentives for all local authorities so that we can work together to foster economic growth and create jobs that benefit the whole of London and the wider UK economy.’
The group is also concerned about the plans to localise Council Tax Benefit, contained in the Bill.
This would transfer the cash for the benefit to councils, but only after it has been cut by 10%. Councils would then decide on local eligibility criteria.
London Councils warned that the change would cost millions of pounds to operate. The 10% cut would also leave each council with an average annual gap of £2m, which could leave them with no alternative but to either reduce support or make up the shortfall in funding with other cuts.
London Councils called for the benefit to merged into the planned Universal Credit, which will combine benefits such as Jobseeker’s Allowance, Employment Support Allowance and Housing Benefit from October 2013.
