Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 2
2
Paragraph: 24
We agree with the principle of incentivising councils to grow business rates in their area,...
Conclusion
We agree with the principle of incentivising councils to grow business rates in their area, as a means of making them less reliant on central funding, but we are concerned about the impact on councils that, through no fault of their own, are less able to do this. As our predecessor Committee concluded, the Business Rates Retention Scheme is too complex in seeking to both incentivise growth and redistribute funding according to need. We are reassured that the Government remains committed to implementing the Fair Funding Review, which, along with the business rates “reset”, could partly restore the link between funding and need, but in the long term we do not see how the BRRS can be the most sensible means of matching funding to need.
Paragraph Reference:
24
Government Response
Acknowledged
HM Government
Acknowledged
The Government announced last year that it would not proceed with the implementation of the Review of Relative Needs and Resources (formerly the Fair Funding Review) and 75% Business Rates Retention in 2021/22. We also decided not to reset accumulated business rates growth in 2021/22. These decisions have allowed both the Government and councils to focus on meeting the immediate public health challenges posed by the COVID-19 pandemic, driving forward recovery and maintaining critical services. This decision was broadly welcomed across the sector. We now need to take stock of the impact the pandemic has had on both local authority resources and service pressures to determine the direction of local government finance reform. Decisions on the way forward will be taken at the ongoing Spending Review.