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EXCLUSIVE: 100% rates retention reforms suspended indefinitely

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The Department for Communities & Local Government has “effectively suspended” reforms to way councils are financed, LGC understands.

LGC reported earlier how the government had failed to set out any plans to legislate for the national rollout of 100% business rates retention. 

The Local Government Finance Bill was dropped from the parliamentary timetable ahead of the general election and there was no mention of it being revived in today’s Queen Speech.

LGC understands Stuart Hoggan, DCLG’s deputy director for local government finance reform and settlement, has briefed representatives from the Special Interest Group of Municipal Authorities. In an email sent to Sigoma members following the briefing, seen by LGC, principal research officer Geoff Winterbottom says: “There are no current plans for resurrecting or re-introducing the provisions of the [Local Government Finance Bill] which means that the introduction of 100% retention is effectively suspended with no current plans for its introduction.”

While business rates pilot areas are to continue, Mr Hoggan said DCLG would contact councils once it has developed proposals for a new business rates policy and how that could be implemented.

Plans to carry out a fair funding review, however, are set to continue as it does not require legislation, Mr Hoggan said. DCLG is currently examining a draft consultation document and it could be published next month, he said.

A DCLG spokesman said: “The government is committed to delivering the manifesto pledge to help local authorities to control more of the money they raise and will work closely with local government to agree the best way to achieve this.”

Earlier this afternoon Local Government Association chair Gary Porter said it was “hugely concerning” that the Queen’s Speech had failed to reintroduce the Local Government Finance Bill.

Jo Miller, president of the Society of Local Authority Chief Executives & Senior Managers, said: “I am disappointed that key legislation – absolutely fundamental to ensuring the future sustainability of local government – has now been dropped.

“Local government urgently needs clarity around our future funding – at present we simply face a cliff edge from 2020. This must urgently be resolved.”

New Local Government Network director Adam Lent said the government should “urgently rethink” its decision to shelve the rollout of 100% rates retention. “The plans to give local authorities and residents more control over council funding was not just about greater accountability and democracy, it was also a key plank of efforts to create more inclusive economic growth,” he said, adding the government had estimated the reforms would add an extra £10bn to the economy.

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