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LGA responds to IFS report on business rates pilot councils

Responding to the Institute for Fiscal Studies’ (IFS) report on English councils piloting 100 per cent business rates retention, a Local Government Association spokesperson said:

“It is vital that we maximise the potential that the further localisation of business rates offers to our local communities and businesses.

“With local government facing an overall funding gap that will exceed £5 billion by 2020, we remain clear that councils must first and foremost be able to use extra business rates income to plug this growing gap.

“Certain aspects of further retention can be tested through pilots and it is positive that, with the new ten pilots for 2018/19 in addition to the pilot covering London and the continuation of the 2017/18 pilots, almost half of all authorities are now covered by a business rates pilot.

“At the same time it is important that the existence of pilots do not affect other authorities now, or when further business rates retention is implemented. The Government also needs to add clarity about what happens to the pilots when 75 per cent retention is introduced.

“Councils must be rewarded for growing their local economies but areas less able to generate business rates income need to remain protected.

“Councils will see their core funding from central government further cut in half over the next two years and almost phased out completely by the end of the decade. This means councils are facing a financial cliff-edge that the Government has to address.”

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