Betts seeks DCLG assurance on four-year funding deals

30 Mar 16

Local government select committee chair Clive Betts has called on Greg Clark to confirm that four-year funding deals offered to local authorities will not be affected by business rate exemptions announced in the Budget.

In a letter to the communities secretary, Betts highlighted that authorities had been offered the deal in the last December’s settlement and would need assurances that the offer still stands after business rate tax cuts.

In the Budget earlier this month, chancellor George Osborne announced that small firms would be exempted from business rates from next April. This will reduce the revenue raised, which is currently 50% devolved to councils, by £1.5bn in 2017/18, and over £1.4bn in each of the next three years compared to previous forecasts, although Budget documents say local authorities will be compensated for the loss of income.

In addition, the chancellor set out plans for additional savings of £3.5bn to be made by 2019/20.

Betts called on Clark to confirm the four-year financial settlements offered to local authorities would remain in place. “Can you give me your assurances that these still hold good and that they will not be affected as a result of the savings needed to fund the Budget?”

Betts urged the Department for Communities and Local Government to consider a forthcoming committee report on business rates localisation. The Budget also stated that in 2020/21, the year Osborne has pledged to fully localise revenues to councils, the annual indexation would move from the Retail Prices Index measure of inflation to the lower Consumer Prices Index, which is expected to reduce revenue by £370m.

Did you enjoy this article?

AddToAny

Top