The Local Government Finance Bill received its Second Reading on Tuesday 10 January. This key piece of legislation provides a vehicle through which the Government will decentralise control over finance and fix the inherent flaws in the last Administration’s model for funding local government.
By introducing a new business rate retention scheme, councils like Bromley will benefit from a new funding system which is more transparent and provides a powerful financial reward for increased business growth in the local area.
Local MP, Bob Neill, was speaking at last night’s debate as Local Government Minister. Commenting on what the Bill could mean for residents in Bromley, he said:
“We have inherited from Labour one of the most centralised local government funding systems in the world and it does very little to help efficient councils, like Bromley, which work hard to grow their local economies.
“Our local area certainly has the potential to benefit from these reforms and, in turn, receive more money which can be invested in local services or used to help keep council taxes down.”
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Notes to the editors
The reforms contained in the Bill include measures to:
• enable councils to directly retain a portion of their business rate growth;
• introduce tax increment financing giving councils freedom to borrow against future income from business rates to pay for roads and transport projects alongside other local priorities;
• ensure a stable starting point for all authorities. No authority will be worse off as a result of their business rates base at the start of the scheme;
• establish a national baseline alongside a system of top ups and tariffs. Councils with business rates in excess of a set baseline would pay a tariff to government whilst those below would get an individually assessed top up from government. This would ensure that all councils would start from a level playing field. How far they then progressed beyond that would be entirely down to them; and,
• create a levy to take back a share of growth from those councils that gain disproportionately from the changes. This money would be used to fund a safety net providing financial help to those authorities who experience significant drops in business rates, for example caused by the closure or relocation of a major business.
The Government is not proposing to change the way that business rates bills are calculated, the way that properties are valued or the way business rates levels are set. National discounts and rate relief will continue to be supported meaning there will be no adverse change to such groups as charities, amateur sports clubs, voluntary groups, those in hardship and eligible rural or small firms.
The Bill will provide a framework for the localisation of support for council tax in England from 2013/14.
The Bill will also provide for a number of technical reforms to council tax, including powers to reduce certain discounts and exemptions. Government has proposed a series of practical proposals which will help hard-working families and pensioners with their council tax bills. The reforms could allow councils to make up to a £20 reduction in the bill for a typical Band D property in England. These proposals are subject to consultation and the Government will if necessary introduce amendments to the Bill in line with final policy decisions.
The Local Government Finance Bill documents can be accessed here:
http://services.parliament.uk/bills/2010-11/localgovernmentfinance.html
A Plain English Guide to our business rates retention proposals can be accessed here:
http://www.communities.gov.uk/publications/localgovernment/resourcerevi…