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Local Government Finance

Ministry of Housing, Communities and Local Government written question – answered on 31st October 2019.

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Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

To ask the Secretary of State for Housing, Communities and Local Government, whether he plans to devise a new funding formula for local authorities which (a) adequately reflects need and (b) does not disadvantage areas with low levels of business rate revenue.

Photo of Luke Hall Luke Hall Parliamentary Under-Secretary (Housing, Communities and Local Government)

The government’s aim is to increase local government’s retention of business rates from 50 per cent to 75 per cent in 2021-22. However, we recognise that redistribution of business rates between local authorities will continue to be necessary where locally retained business rates do not meet their needs.

We have listened to calls for a simpler, up-to-date, evidence-based funding formula and we will aim to deliver this alongside an increase in business rates retention. We are working closely with local government representatives to consider the drivers of local authorities’ costs, the resources available to them to fund services, and how to account for these in a way that draws a more transparent and understandable link between local circumstances and local authority funding.

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