Written Ministerial Statement by Brandon Lewis on the business rates retention scheme.
Business rates retention
I am today publishing a policy statement that provides early confirmation of the government’s policy decisions in a number of key areas following this summer’s technical consultation on the new business rate retention scheme. This policy statement will support local authorities, ahead of the provisional local government finance settlement, in their preparations for smooth implementation of the business rates retention scheme from April 2013.
The business rates retention scheme will enable local authorities to retain a large proportion of locally collected business rates to help fund the services they provide, thereby creating a direct link between business rates collected and local authority income, and reducing local authorities’ dependency on central government grants. The scheme will give all councils a strong incentive to go for growth and could add approximately £10 billion to the wider economy by 2020.
The policy statement confirms government’s intention to proceed with the implementation of a range of proposals that were set out in the technical consultation. It also sets out a number of changes to those proposals, in response to comments received to the consultation, including the government’s intention to maintain the 1:1 proportionate levy but with a limit of 50p in the pound. This will translate into very real benefits for authorities, allowing at least 25p in each extra pound of business rates generated locally to be retained locally. In addition, the policy statement sets out the government’s intention to fix the safety net at 7.5% - the most generous level within the range consulted upon. This guarantee will be maintained in real terms, since baseline funding levels will be uprated by RPI for the purpose of calculating eligibility for the safety net.
Overall, government considers that these policy decisions will result in a system that provides a strong growth incentive for authorities, while being underpinned by robust protections to help councils maintain effective services.
I have placed a copy of the policy statement in the library of the House. The policy statement and a revised plain English guide to business rate retention are also available on the GOV.UK website.
I am also today publishing the data consultation on the 2013-14 local government finance settlement. The consultation sets out the majority of data that may be used in calculating the provisional baseline funding levels and revenue support grant allocations from 2013-14. This release will enable local authorities to begin checking the indicator data.
The consultation can be found on the local government finance website.
Local Council Tax support
In preparation for the introduction of local Council Tax support schemes in April 2013, the government consulted on aspects of the funding arrangements to support authorities to offer Council Tax support.
Next week I will publish an update on these arrangements, including on the government’s approach to addressing budget pressures to ensure all authorities have a fair starting point. Final funding allocations will be included in the provisional local government finance settlement.
I will also be publishing the Council Tax base regulations and the government response to the consultation on providing certainty for the funding of local precepting authorities.
Also the final versions of 2 key Council Tax support regulations (first published in July) have been made and are soon to be published and laid before Parliament - the prescribed requirements scheme and the default scheme.
Links to the regulations will be available on the GOV.UK website.