MPs to investigate business rate retention delay impact on councils

6 Nov 17

A group of MPs will examine the impact of the delay for councils in retaining 100% of business rates revenue.

The communities and local government select committee will look at what the uncertainty for local authorities will be.

Current funding settlements were due to end in 2020 with councils able to retain 100% of business rate revenue in the same year. 

But Clive Betts, chair of the CLG select committee, said Sajid Javid [communities secretary] had told the group the scheme would be delayed.

“The secretary of state told us last month that, although the government still intends to push ahead with the policy, it will be delayed from the original schedule.

“This will undoubtedly have an effect on how local councils make future financial decisions.”

The inquiry follows on from an initial inquiry by the previous committee on the scheme, which looked at the responsibilities councils might be able to take on in return for increased revenue.

The new funding system was originally due to be implemented in 2019/20, with the Revenue Support Grant (RSG) phased out and councils taking on new responsibilities in return for the increase in their business rate revenue.

However, the Local Government Finance Bill, which contained provision for 100% retention, fell when Parliament was dissolved for the general election.

It was not revived in the Queen’s Speech but the government has confirmed it is still committed to the reforms.

In September the DCLG opened up the second round of bidding for 100% business rate retention pilot schemes.  Some schemes - approved pilots - were due to start in April 2018.

The committee is accepting written submissions up to 14 December. 

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