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Javid outlines business rates roadmap with new pilot announcements

As well as making the expected announcement on increasing the social care precept, Sajid Javid revealed that London, Greater Manchester and Liverpool City Region have reached agreement on 100% business rates pilots in his local government finance settlement.

Speaking in the Commons this morning, the communities secretary also noted that these areas would be joined by the West of England, West Midlands and Cornwall.

In response to the announcement, Jonathan Carr-West, CEO of the Local Government Information Unit (LGiU), added that it was good to finally get some clarity on the roadmap towards 100% business rate retention.

“However, in many ways, this settlement illustrates exactly what is wrong with our over centralised political system as the secretary of state shuffled funding from one silo to another,” he added. “Council tax rises cannot be the answer to the crisis in adult social care funding as many of the councils with the most pressing care needs have the lowest council tax base.”

Councils in the West Midlands welcomed the government's announcement that the region will be able to retain all business rates generated locally from April 2017.

Under the new scheme, the seven metropolitan district councils in the West Midlands will no longer receive any Revenue Support Grant from government, but will keep all business rates generated.

Speaking on behalf of the West Midlands metropolitan council leaders, Cllr Bob Sleigh, leader of Solihull Metropolitan Borough Council, said: “I welcome this announcement from the government. It’s the next step towards further devolution to the region, and gives us a real incentive to work with others, including the combined authority, to generate growth in the region.

“If we succeed that will be good for businesses, good for the people they employ, and good for the local authorities in the region. We look forward to working with the government over the next few weeks in sorting out the fine detail of the agreement for the pilot.”

Javid also revealed that since last year’s announcement for four-year funding settlements, 97% of councils have published a long-term efficiency plan. While admitting that much of the public sector can learn from the efficiencies made by councils in recent years, the communities secretary said “we do not believe that more money is the only answer”.

He also noted that savings from the New Homes Bonus, which has generated £6bn since being introduced in 2011, will be retained for social care. Javid added that the scheme needed improvements and a new national baseline of 0.4% would be introduced to ensure local authorities were not rewarded for natural housing growth.

Controversially, he stated that the government will consider withholding payments to councils that fail to meet planning targets from 2018-19. 

Javid added that lifting the adult social care precept will only cost council tax payers an extra £1 a month. And, because it was always intended to allow council tax bills to rise by 6% by the end of this Parliament, by 2019-20 bills will be no higher than they would have been.