Business rates devolution must be used to mitigate cuts, says LGA
Councils should have greater responsibility for areas currently facing cuts, including public health, social care and transport, paid for by devolved business rates, the LGA has said.
In its response to the DCLG consultation on proposals to devolve 100% control of business rates to councils by 2020-21, the LGA said: “At the outset, it is important to emphasise that newly retained business rates must be used to address the projected funding gap facing local government by 2020.”
It says that public health, which suffered £200m cuts last year, “should be funded from business rates in future on the basis that it is unringfenced and on the basis of no further reductions in funding”.
In addition, it said that replacement funding for the Independent Living Fund, early years services and youth justice should be devolved to councils and funded by retained business rates.
However, it says that the Better Care Fund should not be funded from business rates because it is facing a growth in demand and is funded by a pooled budget, supported by the social care precept on council tax.
The LGA also said councils, who are currently facing a £12bn backlog in road repairs, should be able to pay for highways infrastructure investment through business rates funding.
Other areas which it said should be funded by devolved business rates include the bus service operators grant, housing investment, funding for sport, adult education and the Work and Health programme.
The Communities and Local Government Committee warned recently that business rates devolution could mean councils will lose more money through appeals. To address this, the LGA said councils should be able to access money from a national fund for business rates appeals.
It also called for tighter deadlines for when appeals have to be lodged and a review of the functioning and accountability of the Valuation Office Agency.
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