posted on 16 February 2017, updated on 16 February 2017
The DCLG has published its response to the consultation Self-sufficient Local Government: 100% Business Rates Retention on 15 February 2017, and has issued a further consultation on details of the design of the reformed system. Under the proposals, local government will retain 100% of business rates by the end of the current Parliament in 2020, and additional responsibilities will be devolved to local authorities.
The consultation was published in July 2016 and included proposals for grants and functions that could be devolved to local authorities to ensure that the changes to allow local authorities to retain 100% of business rates are fiscally neutral, and a range of questions about the design of the new system. The government’s consultation response includes the following announcements:
- Revenue Support Grant, Rural Services Delivery Grant, Public Health Grant and the GLA Transport Grant will be funded through retained business rates. Attendance Allowance funding is no longer being considered as part of the reforms. The DCLG expects to announce its decision on the range of grants and responsibilities to be funded from retained business rates in spring 2018, for potential implementation in April 2019.
- It is confirmed that the new burdens doctrine will continue under the new system.
- The government will look to build fixed reset periods into the new system, and will explore the option of 'partial resets'.
- Redistribution of resources through tariffs and top-ups will continue in the new system.
- Further pilots of 100% business rates retention will be launched in April 2018 with all local authorities able to apply to participate.
- Further details have been announced regarding infrastructure supplements, with provisions included in the Local Government Finance Bill.
- Under the new system there will no longer be an annual local government finance settlement to distribute central government funding, as local authorities will be more financially self-sufficient.
- The requirement to prepare a Collection Fund Account will remain under the new system.
The new consultation, 100% Business Rates Retention: Further Consultation on the Design of the Reformed System, asks for views on proposals covering an approach to partial resets, pooling and local growth zones, moving to a centrally managed appeals risk system, tier splits in two-tier areas, operation of a future safety net, and proposals for the central list. Responses are requested by 3 May 2017.
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