Local retention of non-domestic rates

Part of Local Government Finance Bill – in a Public Bill Committee at 3:15 pm on 7 February 2017.

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Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government) 3:15, 7 February 2017

It is a pleasure to follow the hon. Gentleman, who is giving me something of an education, or thinks he is giving me something of an education, on this issue, such a placid fellow that he is. I thank him for tabling this amendment and for giving me the opportunity to set out the Government’s approach to the safety net. He seemed to ignore most of the information that had come forward and was almost saying that the Government were not going to put in place a safety net. I agree with him that a safety net is an important element of the system and will certainly become more so—again, agreeing with his analysis—once we are relying on business rates for a larger proportion of councils’ income. Where I must disagree with him is that these amendments are the best way of ensuring that we have the most appropriate safety net in place for the new 100% system. These amendments would hardwire the current arrangements into the system by requiring the safety net to be measured against baseline funding levels. However, that is only one way in which we could construct the safety net under the legislation as drafted. There are others—using different baselines, for example, or providing for different percentage losses for different types of property. Until we have finished our work with the local government sector and put in place all the scheme’s design elements, it is too early to say what form the safety net should take.

It is entirely possible and perhaps likely that the safety net will be constructed along similar lines to how it is constructed now, but if so, it is not clear that 95% baseline funding level is the right threshold. Indeed, in the pilot areas I have referred to, we are testing elements of the 100% rates retention from 2017 and have set the safety net at a 97% threshold. I will certainly want to see how that works before I commit myself to the design of the safety net under the full scheme.