Skip to main content

The ‘let local authorities keep more of their tax revenue’ Bill

Next Discussed

21st
Feb.

Current
Stage

What

This Bill will reform the local business rates system to enable local authorities to retain more of the revenue raised so they can become less dependent on central government grants, which will eventually be phased out. To ensure that authorities that currently raise less in business rates do not lose out, there will continue to be a mechanism for redistribution between authorities, similar to the current system of tariffs and top ups.

It will also give local authorities some discretion in setting business rates and will allow the Greater London Authority and mayoral combined authorities to impose levies on business rates in order to fund investment on projects that could drive local growth, some as public transport.

The Bill also offers tax breaks for up to five years for digital communication companies laying new infrastructure for fibre broadband, providing an incentive for those companies to move further and faster in getting the whole of the UK connected to broadband.

There is also a new discretionary relief for public toilets to reduce the costs on local authorities of maintaining these facilities.

Why

In October 2015 the Government announced that, by the end of the Parliament, local government would retain 100% of locally raised taxes. These reforms to the local government finance system will move local authorities away from dependency on central government grant and towards greater self-sufficiency. The reformed system will also provide local authorities with strengthened incentives for growing their business rates income.

This Bill aims to plug the funding gap being faced by local authorities by localising business rates and allowing local authorities to control, and retain business rates in their areas.

By offering more flexibility and targeted tax reliefs the Bill is also an attempt to boost growth in local economies through investment.

Who

This is a Government Bill introduced by Sajid Javid MP, the Secretary of State for Communities and Local Government.

Other Arguments

This Bill has only just been introduced, so there has not been widespread reaction to it yet. The Local Government Association (the cross-party organisation that works on behalf of councils) seems broadly supportive, although would like to see the flexibility in raising, and reducing, rates given to all local authorities, not just London and other mayoral authorities.

Cllr Claire Kober, Chair of the Local Government Association’s Resources Board, said: “This is an important step on the road towards local government keeping more of its business rates income, something which has long been called for by councils […] Councils can do more to support small businesses and boost high streets with the freedom and finance to set business rates and reliefs locally and all local areas need the power to be able to increase, as well as decrease, business rates - not just those with directly elected mayors.”

How to get involved

You can contact your local MP, or the Secretary of State for Communities and Local Government.

You can also read all about Local Government Finance on the Local Government Association website.

If I don’t act, will it go through?

As a Government Bill it is likely that this Bill will become law.