Issues with appeals and withdrawing the revenue support grant (RSG) must be addressed before the new business rates system for local councils is implemented.
The government plans to reform business rates by devolving power for more than £26 billion to local authorities.
The Communities and Local Government Committee (CLGC) reports that the current plans to end the RSG will lead to difficulty in shifting resources to councils that need them.
The committee has also called for more clarification on protecting authorities which rely on redistributed business rates as they could lose out under the new system.
The report recommends a system of grants to support reformed arrangements with additional funding accompanied by further devolution of responsibilities.
The government’s proposed plans for business rates:
- Local councils will retain 100% of business rate revenue by the end of parliament
- Revenue support grant will be abolished
- Local councils will take on new responsibilities in return for revenue
- Uniform business rate will be scrapped
- Councils will be given power to increase rates to spend on local infrastructure.
The consultation on business rates will take place this summer with the new system due to be implemented in 2020.
CLG Committee chair Clive Betts MP, said:
“The Government must address the alarm of councils, which are understandably worried that their spending needs and the funding of their local services will not be supported by their business rates revenue. Similarly, the issue of appeals is of significant concern to local authorities and it is essential that it is resolved before the Government pushes ahead with business rates changes.”