Probe detail on CTB and business rates

We’ve just completed the committee stage of the Local Government Finance Bill in the House of Lords. The report stage will follow in October and we expect the third reading at the end of that month.

I value enormously the forensic examination of the detail of each Bill that takes place in the House of Lords, as it did at committee stage during July.

Whilst consultation will continue over the summer, it is pretty clear that three things won’t change – the broad principles of the Bill, the date of implementation and the 10% cut in council tax support.

That said, it strikes me as important that central government, as it presses ahead with localisation of both business rates and council tax support, should understand better than it seems to what localisation should mean.

Too often in this Bill, the government still wants to prescribe and proscribe when localism means giving away authority and responsibility.

For example, having decided that council tax benefit would not be part of a national universal credit but would be devolved to councils, surely it should follow that policy on exemptions and discounts should be localised too. 

What we have instead is ‘part localisation’ where the government chooses some bits it wants to regulate but not others and leaves crucial issues unresolved where it has a role such as a definition of ‘vulnerability’ and the clear conflict of interest councils will have in promoting take-up.

Only some councils will be able to make up the 10% reduction in grant from reducing discounts on empty homes and second homes so how local schemes are constructed really matters.

Particularly serious is the pressure that could be put on the working poor who may not be defined in council schemes as vulnerable when that is precisely what they are. A standard definition of vulnerability is a crucial issue for the report stage not least because councils have to undertake equalities impact assessments and may, if they are not properly done, have to deal with the potential for judicial review.  

It is reported that current take-up of council tax benefit may only be 60% of those eligible. Changing the name to council tax support could matter because more people may decide to apply. Councils will have to foot any increased bill and so I would prefer promotion of council tax support to be handled through national publicity rather than just left to local discretion.

It is becoming clear that the 10% cut will in practice be bigger than that. This is why I want the government to take the lead in evaluating the impact of the changes within two years. I remain very concerned by the way in which the cumulative impact of welfare changes across Whitehall departments on some disadvantaged groups is not fully understood.

And business rates? Well, the proposed central/local split needs to be weighted more to local government and we must have reset periods which really do encourage development. Tax Increment Financing cannot just be a version of prudential borrowing but must become a real financial lever for local government to lead growth.

Councils will need better protection against sudden loss of income and revaluation appeals and they should be able to share in rateable value growth of existing properties resulting from a council’s infrastructure investment.

Lord Shipley, government adviser on cities

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