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Sean Nolan, Director for Local Government at CIPFA, said:
“The local government finance settlement contained nothing unexpected. It rightly highlights the need for financial stability as local government transitions to 100% business rate retention.
“While setting out some of the existing grants that will in future be paid for by the extra income retained locally under the scheme, the government needs to set out all the additional responsibilities this reform entails sooner rather than later. It also must be clear that the additional £12.5bn to be retained locally to pay for these new responsibilities factors in the rates relief already promised to certain parts of the business community. As well as outlining the incentives for councils to grow business rates.
“As councils differ widely in terms of both the levels of income generated through business rates and differing service need, CIPFA supports the government’s acknowledgement of the need for a 'fair funding' review – the result of which will be implemented at the same time as the new 100% retention scheme. In practice that means a redistribution of funding between councils, with winners and losers as a result. It will require an open and transparent process and early notice of the likely shifts in funding.
“The turbulence caused by the current revaluation of business rates will only exacerbate the uncertainty around the level of income councils will see.
“The urgent issue for many councils, however, is the chronic underfunding of social care, and while CIPFA cautiously welcomes the increase to 3% of social care precepts, this is a short-term sticking plaster offering no additional medium-term funding and as yet no sustainable long-term solution. Without that the proposed 100% business rate scheme will fail.”
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CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money.
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