Economy and Infrastructure

04.09.17

Councils urged to bid for new tranche of business rates retention pilots

Local authorities are being invited to put forward sustainable and collaborative proposals to retain their business rates growth locally as the DCLG prepares for the second round of pilots.

From April 2018, the government will launch another series of pilots that will see a handful of economic areas retain 100% of their business rates – similar to what has been rolled out in Greater Manchester, West Midlands, West of England, Cornwall and Greater London since April this year, and which will continue into next year.

For this second tranche, the DCLG said it is keen to spread pilots across the country with a focus on rural areas to ensure that more can be learnt about the scheme’s effectiveness in different places.

The findings and lessons from this new string of pilots will be used to develop options for local authorities to retain more of locally-raised money in the future.

“I am committed to helping local authorities control more of the money they raise locally. By encouraging councils to work together, with the aim of sharing their business rates income, it enables them to take a much more strategic view on decisions that benefit the wider area,” said communities secretary Sajid Javid.

“Expanding the pilot programme is an opportunity to consider how rates retention could operate across the country and we will continue to work closely with local government to agree the best way forward.”

The ability to retain business rates growth locally is a cornerstone of local government’s desire to become self-sufficient and self-sustainable as Whitehall forges ahead with reductions to its central government grants. Without it, and because of continued austerity, councils have warned that they will lose 75p of every £1 of core central funding by 2020.

Despite the need to strengthen local funding to ensure councils can continue to pay for services when central government withdraws all grants, authorities have argued that the roll-out of business rates retention by 2019-20 is unrealistic, and have called on Javid to sort out the “shambolic delay” of distributing the £300m business rates relief fund.

Proposals for the second tranche of pilots will need to promote sustainability and collaborative working in order to promote growth. Councils that put forward options to ‘pool’ their business rates – “particularly groups of districts who are proposing to work with their county” – will be viewed more favourably by the DCLG.

The deadline for applications is 27 October and the successful pilots will be announced in December. The department has promised to support authorities in preparing for implementation in April 2018.

Winning bidders will be able to keep all of their business rates income from 2018 to 2019. DCLG has promised the scheme will not affect funding to other local authorities not involved in the pilot.

To apply for a pilot, click here.

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