Agenda item

Nicola Morton, Head of Local Government Finance, introduced the report which set out a number of updates on the LGA’s work related to the Fair Funding Review and business rates retention reform. This included work on the delivery of the LGA’s additional Fair Funding Review work programme, including the assessment of how relative needs changed over time, relative needs assessment models, and modelling of transition options. The report also included updates on the commissioning of a business rates retention model, and the work of the Fair Funding Review and Business Rates Task and Finish Group.

Members noted that the proposed template for evaluating future Fair Funding Review proposals made by the Government or other stakeholders was based on a range of criteria and would be produced for all authorities. It was also noted that the Task and Finish Group had proposed that population data projections be used to in the relative needs formulae; these would be updated, and would reflect need and provide certainty to local authorities, while also being understandable to residents.

Leadership Board were asked for approval to use LGA reserves to commission and fund work on an LGA business rates retention model, which could be used by the LGA and shared with member authorities.

Members also noted that the Secretary of State for Housing, Communities and Local Government had recently published a written statement setting out an error made in calculating the size of allocations of the specific grant to compensate local authorities for caps of the business rates multiplier. This would impact 2017/18 and 2018/19 business rate retention pilot areas.

In the discussion which followed, Members raised the following points:

·         Members welcomed the progress which had been made over recent months. It was highlighted that MHCLG was speaking to District Councils on the tier split, and further consideration would need to be given to how this would work in London, and with the mayoral model. It was confirmed that the split would be wider than counties and districts, and the LGA’s model would acknowledge that point. London Councils were represented on all working groups with MHCLG, and the LGA continued to liaise with them on a monthly basis.

·         Regarding the evaluation form, Members queried if local residents would understand how the funding level was arrived at.

·         Members supported the view of the Task and Finish Group that population projections should be used to develop the relative needs formulae, although it was noted that there were other demographic pressures. It was confirmed that this would take into account all population elements, and would reflect different age groups.

Decisions

The LGA Leadership Board:

a)    Noted the update on the LGA’s Fair Funding Review business rates retention work programme;

b)    Approved the proposed template for evaluating future Fair Funding Review proposals made by the Government or other stakeholders;

c)    Endorsed the view of the Task and Finish Group to support the use of population projections in the relative needs formulae;

d)    Delegated to the LGA Chairman and Group Leaders the sign-off of the final version of the relative needs and relative council tax models;

e)    Approved the use of LGA reserves for the commissioning of a business rates retention model; and

f)     Noted the forward plan of meetings of the LGA Fair Funding Review and Business rates Retention Task and Finish Group.