Source · Select Committees · Public Accounts Committee
Recommendation 24
24
The spending review confirmed the timing of the next and future business rates revaluations and...
Conclusion
The spending review confirmed the timing of the next and future business rates revaluations and stated the government would consult on the possible introduction of an Online Sales Tax to partially replace business rates.93 However, much remained undecided. When we challenged the Department on decisions to come, it noted that the new Secretary of State appeared not to favour going ahead with current plans to increase business rates retention in the near term, although more might be said at the provisional local government finance settlement.94 The Department told us that distributional issues like the review of the funding formula were similarly likely to be the subject of announcements with the provisional settlement.95 The provisional local government finance settlement for 2022 to 2023, announced on 16 December 2021 confirmed the continuation of the existing arrangements for business rate retention and an intention to review the funding formula.96 Following ministerial decisions, the Department committed to significant consultation with local authorities to enable them to understand what the changes would mean for them individually.97 The Treasury was clear that policy development for the online sales tax was not far enough advanced to allow any estimate of the impact that it might have on local government finance.98 We were told that the Department for Health and Social Care has yet to announce how to spend funding allocated for improvements in adult social care and workforce support, although we were assured some funding will start to flow from April 2022.99 Since then, the adult social care white paper has been published but it only sets out how some of the funding will be spent.100
Government Response
Not Addressed
HM Government
Not Addressed
7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions based on local priorities. There is, however, a balance to be struck between giving flexibility and ensuring that the money will be used as intended and effectively. There are instances where ringfencing or bid-based grants are required, for example when we need detailed data from local authorities. 7.3 There is work taking place in both local growth and local government funding spaces to tackle this issue. The department is considering options to simplify grants under section 31 of the Local Government Act 2003 that fall outside of the Local Government Finance Settlement. Additionally, the department is looking at options to streamline the funding process for grants, such as the Levelling Up Fund and the UK Shared Prosperity Fund. 7.4 From the perspective of local authorities, any measures to simplify the local government finance system will be closely linked to local growth ambition on wider funding simplification. Measures across both areas are complementary in reducing the administrative burdens and support the delivery of wider government levelling up ambitions. 7.5 The government’s approach will be to deliver a more transparent, simpler and accountable system, reducing the number of grants whilst also considering options to limit the creation of new grants. We will work closely with local authorities to consolidate in the most appropriate way.