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Cllr Claire Kober, Resources Portfolio Holder at the Local Government Association, responded to the report by the Communities and Local Government Select Committee on business rates retention

"The voice of local government is critical in ensuring the move to localised business rates works effectively. We continue to work alongside government on how the new system should be designed to maximise the potential it offers to our local communities and businesses. This includes how councils can be rewarded for growing their local economies and areas less able to generate business rates income remain protected.

"Almost 900,000 businesses have challenged their business rates bill since 2010 and the Committee is right to highlight the need to tackle this growing problem before any new system is introduced.

"Councils have been forced to divert at least £1.75 billion from stretched local services in the past three years to cover the risk of backdated appeals – of which they have to cover half the cost at present. Under localised business rates, local government could be liable for 100 per cent of the cost of successful appeals. Improvements to the appeals system are essential to avoid the need for them to divert such significant sums of money that could otherwise be invested into local services.

"The Government wants some of the increase in business rates income to be used by councils to pay for a range of new responsibilities that are still to be decided. Councils want to be able to invest some of this extra money into providing services that support local economies and drive local growth. For example, handing over responsibility to pay for skills and transport services would allow local areas to close skills gaps, improve public transport and boost businesses.

"No matter which new services councils agree to take on, it is absolutely crucial that the amount of extra business rates income kept by councils matches the cost of them now and in the future.

"As every penny will count in giving councils the best chance of protecting services over the next few years, the Government also needs to allow councils to use some of the extra business rates income to plug existing funding gaps and ease some of the long-term financial challenges they face."

View related documents:

http://www.parliament.uk/business/committees/committees-a-z/commons-select/communities-and-local-government-committee/news-parliament-2015/business-rates-clg-report-published-16-17/

NOTES TO EDITORS

1. The LGA, other representatives of local government, local councils and interested bodies are working alongside government to implement this change. A Business Rates Retention Steering Group has been set up for them to provide information and expert advice to the LGA and DCLG on how the scheme can and should work. It is overseeing the work of three technical working groups that is looking specifically at key aspects of the reforms that include the design of the new system, needs and distribution and new service responsibilities. For more information visit http://www.local.gov.uk/business-rates