Interim Report on Business Rates Retention
London Councils is urging the government to give careful consideration to the issue of appeals as it looks to move local government to 100 per cent business rates retention by the end of this Parliament.
The cross-party organisation spoke out as the House of Commons’ Communities and Local Government Committee published the interim results of its inquiry into 100 per cent retention of business rates.
The Government must address a range of issues, including problems with appeals and withdrawing Revenue Support Grant (RSG), before bringing in 100 per cent business rates retention for councils, the Communities and Local Government Committee has said in its report.
The Committee found the impact of appeals by ratepayers is dwarfing increases in business rates revenue and affecting growth incentives, with local authorities setting aside substantial sums of money, often for long periods of time, in case an appeal is successful.
The interim report – focusing on plans to bring in the reformed scheme in 2020 – also states that without RSG it will prove difficult to provide a system which gives incentives to growth and looks after those authorities with particular need.
It calls on the Government to specify how it will protect councils which rely on redistributed business rates and are worried that they will lose out under the new system.
The Committee hopes the Department for Communities and Local Government (DCLG) will consider the report ahead of its consultation on business rates proposals this summer. Once this is complete, the Committee will invite DCLG Ministers to give evidence before making a final report.
Commenting on the report, Mayor Jules Pipe, Chair of London Councils, said: “We welcome today’s report from the committee and particularly its focus on the issue of business rates appeals. It is vital that government gets this right to avoid creating significant knock-on effects as further responsibilities are devolved, and local authorities rely evermore on business rates income to fund the services they provide.
“In London, some authorities have as much as 40% of this income trapped in a lengthy appeals process and – if this continues into the new system – there is significant risk that important services relying on this funding would not be delivered.”
“Given the complex variety of local authority areas across the country, it is clear that this is not a situation where a ‘one size fits all’ approach would work, and we look forward to working with government to arrive at an effective solution.”