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LGC View - Resource review

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Just how thorny an issue the government has bitten off for itself with its resource review is now quite clear.

Barely a day passes without a council or membership body listing the potential problems inherent in allowing councils to retain the business rates they collect.

Any system that moves away from funding councils according to need towards rewarding economic growth will prompt howls of outrage from less prosperous parts of the country.

But as the contributions on the following pages make clear – particularly that of Birmingham City Council’s Stephen Hughes, a man steeped in local government finance – implementing safeguards to protect the poor can dilute any incentive effect and create a system as complex as the one it is replacing.

By way of example, Camden LBC – which should be one of the biggest winners under a retained business rate model – calculates that the King’s Cross development, one of the largest in London, will bring in a relatively meagre £1m or £2m in the first year due to the various levies and tariffs the borough is likely to pay.

Meanwhile, those councils under the aegis of the Special Interest Group of Municipal Authorities continue to mutter veiled threats about withdrawing from the Local Government Association should it endorse a scheme they see as potentially creating a north-south divide in public services to match the one in economic performance.

Civil servants have been widely praised for the thoroughness of the resource review consultation that is due to conclude shortly. Whether the resulting actions meet with such widespread acclaim is a different matter altogether.

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