Government announces further business rates pilots

The Ministry of Housing, Communities & Local Government has announced that more councils are being invited to apply for powers to retain the growth in their business rates.

Under new pilots announced by Communities Secretary James Brokenshire, councils will be rewarded for supporting local firms and local jobs and ensure they benefit directly from the proceeds of economic growth.

Following similar success last year, selected pilot areas will be able to retain 75 per cent of the growth in income raised through business rates from next April, incentivising councils to encourage growth in business and on the high street in their areas and allowing money to stay in communities and be spent on local priorities.

The current 50 per cent business rates retention scheme is estimated to see local authorities keep approximately £2.4 billion in business rates growth.

Brokenshire said: “I’m pleased to respond to calls from local government and provide further opportunities for councils to control more of the money they raise locally. I want to encourage councils to work together, with the aim of sharing their business rates income, so they can make better decisions that benefit their wider areas. Continuing the pilot programme for the second time allows us to look at how the system will work from 2020.”

Richard Watts, chair of the Local Government Association’s Resources Board, said: “Many councils have been hugely concerned about the end of core central government funding next year and having to pay vital business rates income to the government as a result of negative Revenue Support Grant in 2019/20. Those affected will be pleased that the government is taking steps to address this issue next year. The LGA will be encouraging all our member councils to respond to this consultation.”

Brokenshire also launched the annual technical consultation on the local government finance settlement, reiterating the government’s intention for the 2019 to 2020 settlement to confirm the final year of the 2016 to 2017 multi-year settlement, and to implement council tax referendum principles as announced last year.

Accepted by 97 per cent of local authorities, the multi-year settlement seeks to ensure that local councils delivering similar services receive a similar percentage change in settlement core funding for those services.