Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

New system fails on clarity front

  • Comment

Discussion in Parliament in the past two weeks has revolved around formulas, damping, floors and ceilings.

It’s all about complicated arrangements to ensure the distribution of government grant to councils reflects their different needs and resources.

Historically councils have received their finance from three main sources. Council tax is set and retained locally; business rates are set by government, collected locally and then passed on to government to return to councils; a final element of government grant is then paid out according to needs and resources.

Those of us concerned about local democracy and accountability have argued that business rates should be localised, as was the case before the poll tax.

The government has ended up producing a system very different but every bit as complicated as the one it replaced

On this basis councils would raise around two-thirds of what they spend. The remaining one-third of revenue from the government would be sufficient to secure the necessary redistribution to deal with the problems of the more deprived areas.

Initially, the government’s announcement that it intended to allow councils to keep part of the business rates they collect seemed a move in the localist direction. Ministers also hailed the ending of a grant distribution system so complicated that no one understood it.

The problem, however, is that the public expenditure cuts have ended government grant altogether. In 2013-14 council tax and business rates will together equal the total council spending allowed and from 2014-5 local government will actually be paying money to central government.

The government therefore wants councils to retain business rates to encourage development. At the same time, without any other grant, the government needs the money from business rates to redistribute from affluent to needy councils.

It might be obvious that trying to use the same money for retention and redistribution is somewhat contradictory. In trying to resolve these contradictions the government has ended up producing a system very different but every bit as complicated as the one it replaced.

The old language now is replaced by tariffs and top-ups, together with the wonderfully titled set-aside and councils will still not control raising half the revenue they spend.

Clive Betts (Lab), Member of Parliament for Sheffield South East

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.