Shake-up of local government funding delayed by a year

5 Sep 19

The communities secretary has postponed implementation of changes to local government funding following the Fair Funding Review and to business rates retention. 

Robert Jenrick has written to councils in England telling them that he will delay the introduction of the schemes until 2021-22 – a year later than planned.

His letter said: “Given the need to provide certainty and stability for next year, I am delaying the longer-term reforms, including business rates retention and fairer funding (Review of Relative Needs and Resources), that we have been planning for the local government finance system until 2021-22.”

The government had planned to increase the percentage of business rates that councils keep from 50% to 75% in April 2020.

At the same time changes following the Fair Funding Review were due to be rolled out and aimed to set a new baseline funding allocation for local authorities based on up-to-date needs and resources.

The delay comes after CIPFA’s chief executive Rob Whiteman called for the chancellor to “reframe his thinking around long-term funding issues”, when the one-year Spending Round was first announced.

Jenrick added: “I recognise that these reforms are very important, however the priority in the short term is clearly to provide the certainty that councils need to be able to set budgets for next year, which will include the implementation of these reforms.”

David Williams, chairman-elect of the County Councils Network, said the news was “disappointing, but understandable”.

He added: “The CCN has already set out that due to the need for short-term certainty and the current situation in Westminster, it would be willing to accept a one-year delay in these reforms in return for a commitment to implement the review as soon as possible.

Jenrick said the outcome of the Spending Round, which renewed existing grants for social care and added an extra £1.5bn, had given local authorities “the certainty they have been asking for”.

Former local government secretary Rishi Sunak has previously said the Fair Funding Review will recognise county areas are under the greatest financial pressure.

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