Four-year deals untouched by business rates cut, Clark confirms

19 Apr 16

Greg Clark has confirmed that business rate cuts set out in last month’s Budget will not affect the four-year funding settlements for local authorities.

In a letter to the local government select committee chair Clive Betts, the communities secretary said taking 600,000 small businesses out of business rates from April 2017 would not lead to funding deals being revisited.

In the Budget, George Osborne announced that firms occupying property with a rateable value of £12,000 or less would pay no business rates from next year.

In total, this is expected to reduce the revenue raised – 50% of which is retained by councils – by £6.7bn over the next five years.

The announcement came after Clark offered councils four-year funding deals from 2016-17, to give town halls certainty over funding ahead of full localisation of business rates revenue, expected by 2020-21.

As a result, Betts wrote to Clark asking for assurances the funding offer would not change as a result of the rate cut for small firms.

In a reply published today, Clark said: “I can confirm the four-year allocations confirmed in the final settlement on 10 February 2016 to be the amounts presented to parliament each year, should councils choose to accept this offer.”

Authorities have until 14 October to respond to the four-year funding offer, and Clark added it is open to any council to continue to work on a year-by-year basis. However, he said he cannot guarantee future funding levels for those that do not accept the four-year deal.

“I have also been clear that the funding allocations in 2019-20 may be subject to the implementation of 100% business rates retention, something councils have asked for over decades and which we are working with the sector to deliver.”

Betts said councils would welcome that the four-year deals are still valid.

“While local authorities will remain under considerable financial pressure, I welcomed the original announcement on four-year settlements and I’m pleased the secretary of state has now reaffirmed this deal,” he added.

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