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Sector seeks common ground on rates

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Council leaders are struggling to find a common position on proposals to radically change the way the sector is funded.

The LGA has asked its leadership board to come up with a position the sector can agree on over the retention of business rates.

While there is cross-party support for finding a common position, the scale of the challenge was made clear by Barnsley MBC leader Stephen Houghton (Lab), who represents the Special Interest Group of Municipal Authorities at the executive.

He told LGC that finding a common position would prove “impossible” as the views of councils in his group, along with those in Yorkshire and Humber and the north-east, were in complete opposition to those in London and the south-east.

However, Gerald Vernon-Jackson, leader of the LGA Lib Dem Group, said it would be “quite silly” for councils to fail to take the opportunity to get business rates back.

The government’s consultation on allowing councils to retain business rates is due to close next week.

A report discussed at the LGA executive included early modelling that indicated around 40% of councils could experience real-terms cuts under the plans, even if revenue from business rates grows steadily. The executive agreed to refer the issue to the LGA’s leadership board to help craft a common position.

While there is support from the leadership of the LGA’s political groups for adopting a common position, individual special interest groups are adopting totally opposing views.

Cllr Houghton said Sigoma had a list of safeguards to protect parts of the country without buoyant economies that it wanted to see implemented. These included index-linking top-up and tariff payments, ‘rebasing’ the system every three years and money from the set aside being used to invest in areas with relatively weak economies.

He said Sigoma’s position was shared by the special interest groups for the north-east and Yorkshire and Humber.

However, London Councils have already submitted a response on behalf of the capital’s boroughs that says the protections for poorer areas had already diluted the incentive effect for prosperous areas.

And writing in LGC, Stephen Hughes, chief executive of Birmingham City Council, said rebasing should occur no more than once every 10 years, if at all, and that the set aside should be used to transfer responsibility for skills or employment programmes.

Cllr Houghton said these divergent views would be impossible to reconcile into a single sector-wide position.

“There’s just no way the LGA can put forward a view representing the whole of local government,” he said. He called for the government to “take a step back” and not implement any proposals before the end of the current spending review period.

But Cllr Vernon-Jackson insisted the sector could not afford to let the opportunity slip by.

“We’ve been trying for so long to get business rates back,” he said. “To now say ‘no, we don’t want them back’ would be quite silly.”

Gary Porter, leader of the LGA Conservative group, said the LGA’s position on the resource review “was still a work in progress”, adding there was “cross party support for the spirit of what the government is trying to achieve”.

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