Budget to provide more business rates support amid revaluation rebellion

24 Feb 17
Local government secretary Sajid Javid has indicated that the government will move to provide additional support for firms most affected by April’s business rates revaluation, but also insisted he would maintain funding certainty for councils.

In a statement released to coincide with the debate on the settlement, Javid said that the Department for Communities and Local Government was working with chancellor Philip Hammond to provide additional support for firms in the March 8 Budget.

Business groups have called for the government to provide additional support for firms most affected by the rates revaluation, which will update property values from levels last set in 2008, and some Conservative MPs have been plotting a revolt on the changes. Islington council has also called on government to halt the changes until after the UK has leaft the European Union.

Javid had previously defended them, publishing figures showing thousands of businesses across the country are set to benefit from lower rates. He stated in particular that this would help boost growth in the North of England and the Midlands.

However, he has now stated greater support would be forthcoming as local government funding “has to be fair to the people who provide the funds in the first place, and that includes the millions of hardworking business owners who pay business rates”.

He added: “Working closely with the chancellor of the exchequer, we will determine how best to provide further support to businesses facing the steepest increases, with further details expected to be set out in the Budget in two weeks,” he stated.

Half of business rate revenue is retained by local government, and town halls keep half of the growth in their area under a system introduced in April 2013.

Once the new system is in place, councils have been warned that their finances could be hit with an increase in business rate appeals as firms look to reduce their bill although the government has said new rules governing business rate appeals will weed out speculative applications.

In his response to the settlement, CIPFA’s director of local government Sean Nolan warned “the turbulence caused by the current revaluation of business rates will only exacerbate the uncertainty around the level of income councils will see”.

However, Javid insisted this would be part of the wider package of local government finance that would provide funding certainty for councils.

The settlement is the second in a four-year deal offered to councils by Javid’s predecessor Greg Clark, and will cover the period until full localisation of business rates revenue to town halls, which is expected to take place in 2019-20.

He also confirmed that all councils will be invited to apply to participate in pilots for business rates retention from April 2018, following on from 6 areas doing so from April this year.

“Over the next year, I’ll be working with councils across the country as we move towards 100% business rates retention, giving local authorities the financial autonomy they have campaigned for over decades,” he said.


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