Responding to the Institute for Fiscal Studies’ (IFS) report on business rates retention, Cllr Claire Kober, Chair of the Local Government Association’s Resources Board, 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. A fairer system of distributing funding between councils is urgently needed and this distribution mechanism, along with the way the new system of business rates retention is set up, should take into account issues such as those identified in the IFS report. No council should see its funding reduce as a result of this new system.
“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.
“There is a real risk that the opportunities arising from a new way of funding the local services our communities rely on will be wasted if we do not make progress in relation to these urgently needed reforms.
“The LGA is continuing to work with the Government on further business rates retention and the Fair Funding Review. Only with fairer funding can councils continue to make a difference to people’s lives by creating jobs and school places, providing dignified care for our elderly and disabled people and boosting economic growth.”