Economy and Infrastructure

24.04.18

Delays to business rate reforms mean councils face ‘financial cliff edge’

The government has not taken sufficient steps to assess the financial effects of the so called “staircase tax” on local authorities, the housing, communities and local government committee has warned.

The Non-Domestic Rating (Property in Common Occupation) Bill would mean that businesses that own one or more adjoining floors with a communal staircase would be taxed as though they had separate properties.

Consequently they would be unable to access the rates relief payments that they would be entitled to if they owned just one building.

When announcing the plans, the government stated that local government would be fully compensated for any loss of income as a result of the measures, yet councils have expressed concerns that they will suffer financially.

Since then, the government has said in a letter to the committee that “no compensation will be payable to local government.”

The committee has therefore called on the government to “explain in detail why it does not now plan to honour its Autumn Budget 2017 commitment to compensate local government fully for the loss of income resulting from the provisions.”

It has also conducted a short inquiry into how councils have been affected by the move from 50% to 100% business rates retention.

The evidence that the committee heard showed that the uncertainty over the reforms has resulted in councils making pessimistic assumptions about their budgets, which it warns could impact on service levels.

Part way through the inquiry the government announced 75% business rate retention in 2020-21, which the committee says did not help to restore councils’ confidence.

It has called on the government to reduce further uncertainty by taking a range of steps, which include publishing a timeline for the forthcoming consultations and key milestones with quarterly progress updates.

Clive Betts, chair of the housing, communities and local government committee, explained: “Many councils across the country are in a difficult financial position, with huge pressures on a whole range of provisions from children's services through to road repairs.

“After many years of financial constraints, the government now has an opportunity to go some way towards protecting vital services for taxpayers by ensuring that any extra revenue from the retention of business rates can be kept by councils on top of current funding.”

Lord Porter, chair of the Local Government Association (LGA), said that the LGA is pleased to see the committee backing it's calls for councils to be able to use extra business rates income to plug the growing funding gap.

“The money local government has to maintain vital services is running out fast.

“Councils will see their core funding from central government further cut in half over the next two years and almost phased out completely by the end of the decade.

“Delays to when business rate reforms will be implemented mean councils are facing a financial cliff-edge in two years that the government has to address,” he added.

 

Enjoying PSE? Subscribe here to receive our weekly news updates or click here to receive a copy of the magazine!

Comments

There are no comments. Why not be the first?

Add your comment

 

public sector executive tv

more videos >

latest public sector news

Council controversially begins first monthly bin collection in England and Wales

25/09/2018Council controversially begins first monthly bin collection in England and Wales

Monthly bin collections have been introduced for the first time in England and Wales by Conwy County Council, despite major complaints from resid... more >
Nottinghamshire leader hits back: ‘We’re the most transparent and open council there is’

25/09/2018Nottinghamshire leader hits back: ‘We’re the most transparent and open council there is’

The leader of Nottinghamshire County Council has hit back against claims that the authority lacks transparency, claiming that the council is &ldq... more >
Exclusive: Notts leader rejects calls for council merger referendum, public decision due in May

25/09/2018Exclusive: Notts leader rejects calls for council merger referendum, public decision due in May

The leader of Nottinghamshire County Council has rejected calls from opposing councillors to put potential merger plans to a referendum, arguing ... more >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this... read more >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the o... more > more last word articles >
Council controversially begins first monthly bin collection in England and Wales

25/09/2018Council controversially begins first monthly bin collection in England and Wales

Monthly bin collections have been introduced for the first time in England and Wales by Conwy County Council, despite major complaints from residents over piles of waste, rats and fly-tipping. ... more >
Nottinghamshire leader hits back: ‘We’re the most transparent and open council there is’

25/09/2018Nottinghamshire leader hits back: ‘We’re the most transparent and open council there is’

The leader of Nottinghamshire County Council has hit back against claims that the authority lacks transparency, claiming that the council is “the most open and transparent council there is.... more >

the raven's daily blog

Social value: what is it and why?

14/09/2018Social value: what is it and why?

Ben Carpenter, chief executive of Social Value UK, discusses the worth of social value, and argues that, before we start measuring social value, we should ask clearly: what is it, and why? Social value is so much more than a value for money exercise. If you see social value as simply a new catchphrase for ‘efficiency savings’... more >
read more blog posts from 'the raven' >

comment

Crown Commercial Service: Travel solutions on track

10/09/2018Crown Commercial Service: Travel solutions on track

Katrina Williams, head of travel at the Crown Commercial Service (CCS), explains how they are helping government organisations to get the best de... more >
LEPs need to do more for England's countryside

10/09/2018LEPs need to do more for England's countryside

Paul Miner, head of strategic plans and devolution at the Campaign to Protect Rural England (CPRE), highlights the findings of a recent survey wh... more >
What about social care?

10/09/2018What about social care?

Cllr Izzi Seccombe, chairman of the LGA’s Community Wellbeing Board, looks at the exclusion of social care from the government’s rece... more >
Re-evaluating public service reforms

10/09/2018Re-evaluating public service reforms

Chris Painter, professor emeritus at Birmingham City University, explores the paradox of reform principles persisting despite mounting evidence a... more >

interviews

Michael King: Time for Ombudsman reform

06/08/2018Michael King: Time for Ombudsman reform

Michael King first joined the Local Government Ombudsman service back in 2004 as deputy ombudsman. At the start of 2017, he was appointed as the ... more >
Helping a city understand itself

06/08/2018Helping a city understand itself

SPONSORED INTERVIEW The urban landscape is changing. How can local authorities keep up with citizen behaviour? Stephen Leece, managing directo... more >
Modern policing: the future is bright

06/08/2018Modern policing: the future is bright

SPONSORED INTERVIEW The public sector, and policing in particular, has often been criticised as being slow to adapt to change. But now, says L... more >
Data at the heart of digital transformation

03/04/2018Data at the heart of digital transformation

SPONSORED INTERVIEW Grant Caley, UK & Ireland chief technologist at NetApp, speaks to PSE’s Luana Salles about the benefits of movin... more >

public sector focus

View all News