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Council finance leaders warn MPs about risks of business rates devolution

Business rates devolution is not as attractive as it seems and raises concerns, three council officials responsible for finance told MPs today.

In an appearance before the Communities and Local Government Committee, the council leaders warned that not enough is known about the government’s proposal to devolve 100% business rates to local authorities.

They said issues to be resolved included whether it would be enough to meet growing pressures on social care and the status of additional top-up grants from the government.

Dennis Napier, assistant head of financial resources at Sunderland City Council, said: “The idea of a 100% business rates retention system is a major concern.”

He explained that since Sunderland has a low tax base, it can’t generate enough business rates income without top-up grants from the government, whose future is unknown under the proposals.

He warned that the money needed to be distributed fairly, taking into account the needs of different local authorities, because there was a risk that low-income authorities like Sunderland could at present “suffer disproportionately”.

Cllr David Finch, leader of Essex County Council, said that devolving the business rates shouldn’t be a top-down process, the calculation of need should take into account the growing cost of social care to councils, and there should be adequate resources to ensure councils can foster business growth.

In the most recent edition of PSE, Cllr Finch set out his four-point plan to alleviate the financial pressures on shire counties.

Andy Hall, business rates assurance manager at Boston Borough Council, said: “It sounds more attractive than in reality it is.”

He said there wasn’t enough known about the proposals and changes would be needed to make them work.


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