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The Local Government Finance Bill is entering the House of Lords having passed its Commons stages.  The Government is hoping for a speedy passage and Royal Assent by the summer recess, so that the two main measures of the Bill, business rates retention and the new local Council Tax support schemes can come into effect in April 2013.

On 17th May, Government published a series of documents in support of the Bill.  As regards business rates retention, it said that the local share, on which retention will be based, will be 50%, with the central share being the other 50%. The central share will have to be paid into the central pool. It will then redistributed to local authorities as a grant.  Some of this will be distributed using the same formula as that used for the baseline in the local share, based on the current formula grant system.  Perhaps confusingly, the Government intend to call this Revenue Support Grant.

However, this means that only 50% of business rates will be kept within the retention system. The Government’s own economic analysis, coincidentally published at about the same time, said that this would detract from the economic effect of the incentive and the Local Government Association has been lobbying that the central share should go down in future spending reviews, allowing local government to keep more of the retained business rates.

Other documents published on business rates retention concern pooling and the rules governing the levy and the safety net. It will be interesting to see how many authorities decide that pooling with their neighbour is one way of minimising risk.

The second reading took place in the House of Lords on 12th June and the first sitting of the Committee stage yesterday, with the second due tomorrow

Later in July, we expect more details, including a Consultation Document on what changes are likely to the relative needs formulae, including updating data such as population.

The clock is ticking …

Howard Elliott, Head of Business Rates at bdt, believes that if business rates retention does come into effect in April 2013, Billing Authorities may change their views on discretionary relief and may seek to bring buildings that are currently unassessed, into the Rating List.

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Contact for further information:
Howard Elliott
bdt
E-mail:  howard.elliott@bdt.uk.com
Telephone:  01256 840 777
4th July 2012

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