Responding to the National Audit Office report on 100 per cent retention of business rates, 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. While it won’t in itself solve the long-term funding challenges facing councils, it is absolutely critical to ensure any new system works effectively.
“As the NAO has rightly recognised, it has to fundamentally be underpinned by a proper needs assessment implemented in a way which balances rewarding councils for growing their local economies, but avoids areas less able to generate business rates income from suffering as a result.
“Decisions over which grants and responsibilities councils will have to pay for from any extra business rates income are crucial.
“Local government continues to faces significant funding pressures over the next few years. We remain clear that councils must first and foremost be able to use extra business rates income to plug this growing gap before any extra responsibilities are considered. Local authorities should then be able to invest the rest into services which support local economies and drive local growth, such as closing skills gaps and improving public transport.
“Provisions for business rates appeals to be managed centrally represent a significant step in the right direction towards protecting councils from the growing and costly risk of appeals. Councils have been forced to divert £2.5 billion away from stretched local services over the past five years to cover the risk of business rates appeals, as they have to fund half the cost of any backdated refunds and could become liable for 100 per cent of refunds.
“The LGA continues to work alongside government and councils on how the new business rates system should work.”