Latest Public Sector News

29.09.17

‘More options needed’ as rates retention to leave counties worse off

Business rates retention could leave counties worse off rather than make them more financially self-sufficient, with the funding gap widening over time and threatening to reach £700m by 2029 – on top of any existing gap at that point.

The findings come as part of independent analysis commissioned by the County Councils Network (CCN), which modelled the impact of 100% rates retention in England as promised by central government.

While future proposals on where to take the policy are currently in doubt after relevant legislation was dropped from the Parliamentary calendar, DCLG has recently invited bids from all parts of the country to pilot full retention during the next financial year.

But county books could take a hit if they decide to join the scheme as it stands. The analysis uncovered a potential diverge between what counties would retain in rates and their cost pressures, with business rates growth failing to keep up with “acute demographic and service pressures.”

In contrast, other parts of the country, such as London boroughs and district councils, could “disproportionately benefit” from the pilot.

The CCN’s finance spokesman and leader of Leicestershire County Council, Cllr Nick Rushton, said his organisation is publishing the analysis in the hopes of setting the pace in discussions over how local government could be funded “during this reflective period.”

“Our research does not aim to dissuade counties from taking part in the pilots, but as a supporting body of evidence to inform their decisions,” he explained. “The modelling we have released shows the unique challenges facing county authorities in implementing 100% business rates retention.

“CCN is supportive of moves towards greater local retention, alongside wider fiscal devolution, but we must ensure the system provides sustainable long-term funding and a platform to truly incentivise growth and self-sufficiency.”

As a result, the organisation believes more options should be on the table – something which ministers “have indicated is the case in halting the legislation.”

Since the government published its pilot prospectus, the CCN has been raising concerns that the DCLG has not included a ‘no detriment’ cause in plans, in contrast to the previous round of pilots. As a result, some counties believe the lack of this clause – alongside just a year to pilot the policy – could deter potential bids and may result in only ‘high growth’ county authorities coming forward.

Although the research undertaken considers the impact of the retention scheme beyond just a year’s pilot, looking instead at a whole decade, the CCN questioned whether “it is equitable that the 2018-19 pilots are treated differently to the first round.”

“These findings clearly demonstrate the need for a fairer funding formula as part of wider reforms to local government finance. These reforms must stay on track and government should not shy away from adopting a new approach to measuring relative need; one based on real cost-drivers, not past spend,” argued Cllr Rushton.

“The current the system is completely unfair on county authorities. If government provides full funding for unfunded pressures through a transparent and fair funding formula it should feel confident it can win the support of the sector, and importantly, MPs.”

(Top image c. Alphotographic)

Comments

There are no comments. Why not be the first?

Add your comment

 

related

public sector executive tv

more videos >

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 open more > more last word articles >

public sector focus

View all News

comment

Acas and the people's powerhouse

18/02/2019Acas and the people's powerhouse

Ahead of her speaking slot at this year’s EvoNorth, Acas chief execut... more >
Bolton and Wigan's strategic ICT partnership: Crossing borders together

18/02/2019Bolton and Wigan's strategic ICT partnership: Crossing borders together

Alison Hughes, assistant director of strategic ICT partnership at Bolton &a... more >

interviews

Digital innovation in the public sector: The future is now

17/12/2018Digital innovation in the public sector: The future is now

One of the public sector’s key technology partners has recently welco... more >

the raven's daily blog

Blog: LiveTiles at EvoNorth 27-28 Feb 2019

21/02/2019Blog: LiveTiles at EvoNorth 27-28 Feb 2019

LiveTiles is proud to be sponsors of EvoNorth, taking place on 27-28 Feb 2019 at the Emirates Old Trafford Cricket Ground. Designed specifically for the North, by the North, ... more >
read more blog posts from 'the raven' >

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 feeling of imminent change than the article James Palmer, mayor of Cambridgeshire and Peterborough, has penned for us on p28. In it, he highlights... read more >