Local Government Funding

Part of Opposition Day – in the House of Commons at 3:20 pm on 28th March 2018.

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Photo of Sajid Javid Sajid Javid The Secretary of State for Housing, Communities and Local Government 3:20 pm, 28th March 2018

I will come on to discuss the pilots in a moment, but the good thing about them is that all the local authorities involved, including Suffolk, will now be able to experiment and see what they can do to help raise those local rates by having more incentives for businesses and attracting more businesses to the area. One clever way of getting more revenue is by getting more businesses into the area.

As we look at the resources of local authorities, we need to start looking at creating a whole system of local government finance that will be fit for the future. The current formula for financial allocations had served local areas well over the years, but a world of constant change, with big shifts in demographics, lifestyles and technology, demands an updated and much more responsive way of distributing funding. That is why there are questions over the fairness of the current system, which is why I was pleased to launch a formal consultation on a review of councils’ relative needs and resources in December. That closed recently and I am grateful to everyone who responded. This was not just a paper exercise; we have an unparalleled opportunity here to be really bold and ambitious; to consider, with the sector, where the most up-to-date data and evidence lead us, and to create a new system that gives councils the confidence to fully grasp the opportunities and challenges that lie ahead. We aim to introduce this new approach in 2020-21.

That is also when the latest phase of our business rates retention programme will get under way. It is a programme that gives local authorities powerful incentives to grow their local economies, and so far it has been a resounding success. Councils will keep some £2.4 billion more of their business rates next year alone; this a significant revenue stream, on top of their core settlement funding.