Agenda item

To seek endorsement of the responses to the business rate retention consultation and call for evidence on needs and redistribution.  

Cabinet received a report seeking endorsement of two responses prepared to consultations by government - “Self-sufficient local government: 100% Business Rates Retention” and a separate call for evidence paper on “Needs and Redistribution” to help reset the existing distribution of funding through baselines and tariffs/top-ups.

The report set out the main issues in both the consultation paper and the call for evidence together with KCC’s initial assessment. Final responses were included as appendices and the deadline for responses to both documents was later that same day and the Leader emphasised the importance of the exercise, particularly the call for evidence which was the key to creating a more fair and sensible system of local government funding.

The Deputy Leader and Cabinet Member for Finance and Procurement introduced the item for members.  He cautiously welcomed the proposals that local authorities retain business rates but warned that it would not alleviate the issues of rising demand already discussed at the meeting.  He turned to the call for evidence; he welcomed the opportunity to help to simplify a complicated system and to create a more just outcome for redistribution of funds for local government.

Andy Wood, Corporate Director for Finance and Procurement echoed Mr Simmonds comments, he argued that done properly these changes represented an opportunity for local government but that done badly would be detrimental to local government and therefore to KCC.  He also referred to the following:

• That the government proposed to devolve new responsibilities to local government in return for business rate retention and there were four core principles on which the government claimed any devolution should be based:
  • Build on the strengths of local government i.e. represent opportunities for greater integration across local services, remove barriers, reflect appetite for local delivery and local capacity
  • Support the drive for economic growth e.g. links to local employment, skills and infrastructure
  • Support improved outcomes for service users and local residents
  • Take account of medium-term financial impact on local government e.g. costs should be predictable, relative to changes in business rate tax base, demand is stable or can be managed
• These principles appeared sound but some of the proposals put forward did not align with them.  In particular Mr Wood referred to proposals transfer responsibility for attendance allowance payments to local authorities.  This proposal was firmly rejected in the council’s response.
• That the Council’s response did not support expenditure based regression as a means to assess councils’ funding needs and argued that this approach should not be used as the basis for needs assessment or redistribution as it effectively preserved the historic funding distribution and therefore maintained existing deficiencies in the funding arrangements.

The Cabinet Member for Environment and Transport raised the issue of the process for allowing business rate reductions and the lack of transparency therein and urged the council to recognise this risk.  Andy Wood suggested that a solution may be to devolve the business of the valuation office to the council and that this proposal had been included in the KCC’s response.

It was RESOLVED that the responses be endorsed and submitted by officers accordingly.