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Appeals to be funded nationally under rates retention bill

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Successful business rates appeals are to be funded centrally under the new Local Government Finance Bill, published today.

The bill, which paves the way for local government to retain 100% of business rates, sets out powers for the communities secretary to authorise a ‘loss’ payment to a billing or precepting authority following an alteration to the Valuation Office Agency’s rating list.

Speaking at the Local Government Association’s annual finance settlement conference last week, senior Department for Communities & Local Government official Stuart Hoggan said the pot would be funded by top-slicing business rates funds nationally, rather than on an individual authority basis as happens currently. 

The LGA welcomed the move. Chair of the resources boar Claire Kober (Lab), said: “Provision in the bill to allow for government to pay local authorities for the cost of business rates appeals is positive. Reforming the business rates appeals system is essential to protect councils from the growing and costly risk of appeals.

“Councils have been forced to divert £2.5 billion over the past few years from local services to cover the risk of paying half of appeals and refunds over the past five years. This has to happen before local government keeps all of its business rates income as this could mean it is liable for 100 per cent of refunds.”

As expected, the bill also gives mayoral combined authorities, and the Greater London Authority, the power to impose an infrastructure levy worth no more than 2p per pound.

However, ministers have ditched plans requiring local enterprise partnerships to approve the levy.

LGC reported last week how the DCLG was considering not giving local enterprise partnerships the power to veto the levy following widespread opposition to its consultation on the proposal.

Instead combined authorities will only have to ensure businesses are consulted on any proposed levies through a public prospectus. That document will need to outline a description of the work to be undertaken, an estimated cost, and show any potential impacts and benefits on businesses. The prospectus will also have to set out how long the charge will last for.

The bill stipulates that money raised can only be spent on a project to which it relates. It cannot be used to fund housing, planning, social, education, children’s, or health services.

The levy can be used to pay off loans taken out for a particular project.


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