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Revealed: the areas bidding to become business rates pilots

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More than 20 areas have submitted bids to the government to pilot 100% rates retention, LGC can reveal.

LGC research has established that at least 22 bids, covering more than 180 councils, were submitted to the Department for Communities & Local Government by the 27 October deadline. 

Most of the bids identified by LGC cover two-tier county areas but two groups of unitary authorities - covering Berkshire and Herefordshire, Shropshire and Telford & Wrekin - have also developed proposals.

While there is a lot of interest, the expectation is the government is only likely to back between four and six pilots in 2018-19 at the most.

Sheila Little, president of the Society of County Treasurers, told LGC: “They are going to look for a spread across the country and across the types of areas. I don’t think they are going to go for all deprived or wealthy areas. I would’ve thought they will go for a mix.”

Areas hoping to become 100% rates retention pilots in 2018-19
Derbyshire, including Derby
Essex, including Southend-on-sea and Thurrock
Herefordshire, Shropshire, Telford & Wrekin
Leicestershire, including Leicester
North Yorkshire* and East Riding
Staffordshire, including Stoke-on-Trent
West Sussex
* Excluding Harrogate BC and York City Council

Pilots are already in action in Cornwall, Greater Manchester, Liverpool, West Midlands, and West of England, while London is also set to pilot full rates retention from 2018-19.

As the majority of the current pilots are in urban areas, the Department for Communities & Local Government’s prospectus expressed an intention to “focus on rural areas”.

But not every area with a bid can hope to be successful, and finance experts are predicting the winners will have demonstrated more than just their rural credentials.

DCLG’s prospectus said: “We particularly want to see additional growth being used to promote the financial stability and sustainability of the pooled area. In addition, we would expect some retained income from growth to be invested to encourage further growth across the area.”

LGC previously reported how the DCLG was considering withdrawing the ‘no detriment’ clause, which guarantees current pilot areas will not be worse off, from the next wave. However, on 25 October councils were notified that the ‘no detriment’ clause would apply to all pilot areas.

LGC understands that notice – delivered two days before the deadline for applications – was too late to revive talks about submitting a bid in some areas, including Nottinghamshire.

An announcement about which bids have been successful is expected around the time of the local government finance settlement in December.

Ms Little said the SCT has worked with the Society of District Council Treasurers to ask the government to provide details about how pilots are selected and the contents of each area’s agreements.

“I don’t think we will get that but we want transparency and fairness,” said Ms Little.

Both societies have also urged the government to involve areas which did not submit a bid or are not picked to become a pilot in future discussions that will “shape and influence” the development of the business rates retention policy.

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