“Councils demand ‘clarity’ over funding after business rates devolution is dropped.
A steering group which spent the last 15 months consulting on how 100% business rates retention would work has been disbanded after the exclusion of local government finance legislation in this week’s Queen’s Speech.
Parliamentary time to consider the Local Government Finance Bill in the last Parliament ran out before Theresa May called this month’s General Election. However, the sector was stunned this week when the government made it clear that it would not revive the process for at least two years.
Room151 has seen a letter sent to members of the steering group from Anne Stuart, the newly-installed civil servant leading the business rates retention process.
It said: “I’m sorry this should be my first communication, but I am emailing because as you will have no doubt seen, the Queen’s Speech did not include a new Local Government Finance Bill and so it will not form part of the Parliamentary timetable for this session.”
In her letter, she thanked members of the steering group but said she would only be in touch “once we are in a position to resume working with you on the future of local government finance reform.”
However, she said that ministers remain committed to local government taking greater control of its income. “We are engaging ministers on the options for future reform without an immediate Bill…,” she said.
Ministers have reaffirmed their commitment to a thorough, evidence-based review and that work will continue with local government on that issue, Stuart said.
One steering group member told Room151: “This is more than a year’s work down the drain.
“If the government is planning to introduce any reform by executive order, it needs to make sure they take the sector with them.”
Lord Porter, chairman of the Local Government Association, said that the failure to move on with business rates devolution was “hugely concerning”.
He said: “While negotiating Brexit will be a huge challenge for the government, it cannot be a distraction from the challenges facing our public services. The day-to-day concerns of our communities go far beyond Brexit.
“Only with adequate funding and the right powers can local government help the government tackle the challenges facing our nation now and in the future.”
Jo Miller, Solace president and chief executive of Doncaster Metropolitan Borough Council, said: “I am disappointed that key legislation—absolutely fundamental to ensuring the future sustainability of local government—has now been dropped.
“Local government urgently needs clarity around our future funding—at present we simply face a cliff edge from 2020. This must urgently be resolved.”
A DCLG statement said: “The government is committed to delivering the manifesto pledge to help local authorities to control more of the money they raise and will work closely with local government to agree the best way to achieve this.”
The steering group to guide the process of business rates devolution was created in March last year after George Osborne announced that primary legislation would be introduced to allow councils to keep 100% of growth in business rates—up from the current 50%.”