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Four year settlement could be expanded

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Ministers have confirmed they are pressing ahead with a four year finance settlement for local government and are considering expanding it to include more grants.

A technical consultation on the 2017-18 settlement, published last week, confirmed that revenue support grant, rural services delivery grant, the transition grant and business rates tariff and top up payments as they relate to need, will be as indicated in the four year settlement published in February.

The document said the government would “like to consider expanding the current multi-year offer to give local councils who are committed to reform the opportunity for more security over more of their funding for the rest of this parliament”. It said this could be achieved by including more grants in the offer.

In order to receive the four year settlement, councils must submit an efficiency plan to government by 14 October. The government has declined to provide detailed guidance on what the plans should contain but the consultation pointed to a series of ‘top-tips’ from the Local Government Association and the Chartered Institute for Public Finance and Accountancy. These said the plan “need not be any more than an ‘abridged version’ of key/existing public documents already put together by a council”.

The document said the government intended to confirm the four year settlement to “qualifying councils soon after 14 October”.

The consultation also confirmed any increase in council tax above 2% will continue to trigger a referendum and extended the limit to larger parishes. It is seeking views on how the new pilots of 100% business rates could work and how any changes in business rates income as a result of the 2017 revaluation will be managed.

The consultation said it will be too difficult to isolate the change in business rates income in 2017-18 as a result of the revaluation as opposed to other factors such as appeals. Instead it proposed using the percentage reduction in gross business rates as a proxy for the reduction in net business rates.

Geoff Winterbottom, principal researcher at the Special Interest Group of Municipal Authorities, thought that could work but added it would not account for any changes in mandatory reliefs.

He told LGC: “The fact that the four year offer is as expected is good news. We’ll wait and see how [the revaluation formula] is going to work with the outcome of the revaluation.”

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