MPs warn on Treasury's plan to let councils keep business rates

Communities committee chair Clive Betts says councils are "worried that their spending needs and the funding of their local services will not be supported by their business rates revenue"

By Josh May

14 Jun 2016

MPs have highlighted “a host of issues” with the government’s plan to devolve full responsibility for business rates to local councils.

Chancellor George Osborne last year announced plans, to be implemented by 2020, to let local authorities keep all revenues from business rates and to vary the level of the taxes.

But parliament's Communities and Local Government Committee has warned the government that withdrawing the mechanism for additional funding – the Revenue Support Grant (RSG) – could make it more difficult to get resources to areas in need.

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And the MPs say ministers should seek to resolve the “massive problem” of business rate appeals by companies leaving councils unsure of how much money they have to spend.

Committee chairman Clive Betts said: “Our interim report has highlighted a host of issues regarding the reformed business rates system and we are calling on the government to take these on board and work closely with local government to find the necessary solutions.

“The government must address the alarm of councils, which are understandably worried that their spending needs and the funding of their local services will not be supported by their business rates revenue.

“Similarly, the issue of appeals is of significant concern to local authorities and it is essential that it is resolved before the government pushes ahead with business rates changes.”

The MPs suggest allowing councils to vary rates depending on what type of business occupies the premises.

A spokesperson for the Department for Communities and Local Government said: “This report not only recognises the significance of 100% business rate retention but also endorses the move towards greater financial self-sufficiency for councils – something local government has called for over decades. We will consider its proposals carefully.”

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