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Analysis: Disappointment at extent of business rates pilots

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The chair of the Liverpool City Region Combined Authority has expressed disappointment over the extent of the area’s 100% business rates retention pilot.

Joe Anderson (Lab) also said devolution was “pretty worthless” as he questioned whether the government was “able to get their various departments to play ball” when discussions about deals come to the crunch.

Details about the “bizarre” negotiation processes with central government have also been raised by a prominent politician in Cornwall.

LGC previously reported how details of the six business rates pilots due to start in April were published alongside the final finance settlement this week.

From April, councils in the Liverpool City Region will see revenue support grant and the £9m improved better care fund money funded through business rates. 

Joe Anderson

586 Joe Anderson

Joe Anderson (Lab), Liverpool City Region Combined Authority chair and Liverpool City Council mayor

Mr Anderson, who is also Liverpool City Council’s mayor, said the city region wanted the improved better care fund included as local leaders “wanted certainty that 100% of this funding could be used for adult social care without any new strings being attached”.

However, Mr Anderson added: “From the outset, we wanted the pilot to be wider-ranging and include different grants and flexibilities for us to try out. So it is disappointing that some of our ideas weren’t adopted by the government.”

The city region had been seeking greater freedoms to set council tax and discounts, including control over council tax support schemes, and piloting the use of the central list to fund appeals and potentially any safety net payments. None of these initiatives were contained in the pilot for 2017-18.

Mr Anderson said: “The government started off by heralding these pilots as a way of looking at all sorts of things but they don’t appear to be able to get their various departments to play ball.

“Devolution is pretty worthless at the moment – it seems to be reduced to transferring ring-fenced monies to us without any real further powers and resources.

“People are right to question whether there is a real intention here and we will be pushing to expand the areas being piloted, but it would help if the government could make up its mind whether it is still serious about devolution.”

In Cornwall, the council will receive highways and transport funding worth £26m as well as £3.2m rural grant funding as part of its rates retention pilot.

Adam Paynter (Lib Dem), deputy leader and portfolio holder for resources, told LGC the council specifically wanted highways and transport funding to help address Cornwall’s infrastructure issues.

He said having £20m of highways maintenance money rolled into Cornwall’s baseline was “key” as it is normally a capital grant. However, under the pilot the money can be used for revenue purposes, said Cllr Paynter.

“They say they’re expecting us to use it on highways but there’s no ringfence… They’re giving us the freedom and flexibility which is what the Local Government Association argued for in the first place.”

Cllr Paynter said the money could be used to borrow towards highways projects and added: “If we wanted to raise more capital off the back of that money then we can use that money upfront without it being spread over the course of four years. That’s certainly good for us.”

Cllr Paynter hoped Cornwall might see an “increase” in the amount of funding it receives as part of the pilot based on the growth in business rates it expects to receive under 100% retention.

But as Cornwall’s revenue support grant reduces from £43m in 2017-18 to £28m in 2018-19, Cllr Paynter said that would be offset by the rolling in of the public health grant and bus services operator grant to ensure the pilot is fiscally neutral to the government and the council is not left worse off.

Cllr Paynter likened the business rates pilot negotiations to when Cornwall secured a devolution deal without an elected mayor in July 2015.

“Things kept coming in and out of the deal,” he said. “It was almost quite bizarre the way the government did it. One minute it would put stuff in, like it did with highways money, and then they said ‘We’re not going to do that’, and then they said they would ringfence it, and then they said they would let us have it as it is.”

Cllr Paynter said central government needed to “learn to trust local people”.

“I don’t think it’s as much the ministers but the civil servants that are paranoid about giving away power and giving councils the ability to do what they please,” he said. “I think it’s a loss of control which central government don’t like…

“They’ve got to learn to trust local people and obviously if we get it wrong then we’ll pay for that at the ballot box. That’s no different to an MP or the government taking decisions and I think they need to worry a bit less about local decision making.”

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