London business rate retention not far enough, say local government leaders

24 Nov 17

Councils need greater devolution and more funding, local government leaders said after the chancellor announced in the Budget London councils will pilot 100% business rate retention in 2018-19.

Chair of the Local Government Association Lord Porter called for all councils to be able to keep “every penny of business rates collected”, after the Budget was delivered on Wednesday.

“We remain clear that local government as a whole must be able to keep every penny of business rates collected to plug funding gaps while a fairer system of distributing funding between councils is needed,” Lord Porter stated.

Jonathan Carr-West, chief executive of London-based think-tank LGiU, said being able to retain business rates was not enough and councils would still need more funding.

“Councils still need to see progress on broader funding,” he stated. “Additional business rate retention pilots should be part of a coherent policy programme not just a free for all.”

London mayor Sadiq Khan said: “This is an important step in devolving more control over the use of the capital's tax revenues to London government.”

Khan called on the government to devolve more fiscal powers to local authorities in the capital.

The pilot announcement came after the mayor and borough leaders agreed a business rate scheme to form a pool and invest revenue growth strategically on a pan-London basis.

The total rateable value in Greater London is £10.8bn meaning the pilot will give a business rate income for 2018-19 for Greater London of approximately £5.5bn, according to analysis from accountancy firm Deloitte.

Claire Kober, chair of London Councils, said: “This is an essential step towards more sustainable funding of the local services upon which Londoners and London’s businesses depend.”

She said it would enable further investment in infrastructure to support economic growth and create more jobs across the capital.

The Budget documents also revealed the government will continue to pilot additional business rates retention for councils across England.

Pilots have already been launched in Liverpool, Greater Manchester, West Midlands, West of England, Cornwall and Greater London.

New pilots for 2018-19 will be announced following the Department for Communities and Local Government’s assessment of recent applications to its scheme.

In September the government announced that it was opening bidding for its second round of 100% business rate retention.

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