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The Local Government Association is considering whether it should continue to concentrate its lobbying efforts on d...
The Local Government Association is considering whether it should continue to concentrate its lobbying efforts on demanding the return of business rates to local control.

Full repatriation of business rates is a major policy objective of the association because it would instantly see the proportion of local government finance raised locally increase from about 25% to around 50%.

But ministers have made clear the return of business rates is out of the question for at least 10 years. Even the government's proposals to allow councils to levy a small supplementary rate failed to make either the best value and capping Bill or the draft Bill on standards and organisation.

Faced with such ministerial opposition, the LGA is now looking at possible alternative forms of taxation to help increase the proportion of local government finance raised by councils themselves.

The LGA's resources panel is due to meet next Thursday to discuss the association's tactics on local government finance.

LGA finance director Neil Kinghan said: 'We've had the return of business rates as a main objective, but we're not making as much progress as we would have hoped. So the question is whether we devote more effort to other ideas.'

While there is no question of the LGA dropping its stance on business rates, there is growing recognition that the association needs to consider other lobbying options.

LGA chairman Sir Jeremy Beecham, who chairs the resources panel, said: 'We need to do both. The omens for the return of business rates don't look great, but 10 years is an interminable time in politics and we hope the government will look at this afresh.'

Gordon Keymer, Conservative deputy chairman of the panel, said he was keen to explore the 'step increase in council tax' proposal. He said increasing the proportion of local government finance raised locally must not be accompanied by an overall increase in the tax burden.

Mr Keymer said there had to be a restriction on business rate increases, but added: 'We should still battle for at least an element of business rates to be raised and spent locally.'

Ian Brooke, commerce and technology director at Huntingdonshire DC and an adviser to the panel, said: 'I think a proportion of local authority income should be derived from local business rates. I support the return, but perhaps not in the previous fashion.'

Somerset CC finance director Chris Bilsland, another panel adviser, said: 'I think the LGA should continue to fight the good fight on business rates. I don't think the government's arguments are very strong.'

But one leading finance director said: 'There's still an appetite for pursuing business rates and also for looking at other taxes. Personally, I'm not convinced this is a sensible route - new complexities will go down like a lead balloon.'

A government source said: 'We need to get away from this tax-and-spend mentality. Councils need to get more bang for their bucks. Look at the biggest spenders on education: they do not deliver the best services.'

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