Prior to 2013/14, councils handed business rates they collected to the government and received a share back as part of overall government grant. In 2013/14, the government implemented reforms which allows councils to retain a proportion of the business rates they collect in exchange for a reduction in their grant funding. Camden currently retains about 19% of the business rates collected, with the rest going to central government for redistribution and the Greater London Authority.
In 2019/20 a London-wide 75% business rates retention pilot pool has been proposed that if approved by all parties will cover all 32 London Boroughs, the City of London Corporation and the GLA. While this would not mean that London would retain all of the business rates collected by the members, it does mean 75% of any growth in the business rates base would be retained and distributed within the pool. Unlike the 2018/19 London-wide 100% business rates retention pilot pool, the system will not redistribute the growth across all boroughs ensuring that no borough is worse off than it would have been under the previous system. This will not affect the bills that businesses pay.
Camden welcomes the pilot pool as a step towards wider devolution. We have strongly supported the principle that councils should retain more funding generated locally as part of our advocacy of wider devolution as a means of improving outcomes by moving decisions closer to the residents and businesses they effect. We argue that services that have a direct relationship to business should be transferred to councils including services that can help tackle key infrastructure challenges, including housing, transport and digital connectivity.
It will be important that should the pilot evolve into a permanent pool, the revised system resolves the issues in the current system such as growth only being measured by increases in the base (rather than property values for example) and the ongoing unpredictability resulting for the large backlog in appeals. The Council also argues that the control over discounts, reliefs and multiplier should be devolved to support local economic growth and priorities.
Grant cuts and rising costs still mean that further savings will need to be achieved next year and the years beyond. The Medium Term Financial Strategy report to Camden’s Cabinet in December 2018 set out an overview of the Council’s financial position, including our plans to address the medium term funding deficit and an update on preparations towards setting the 2019/20 budget. See the supporting documents and have your say on proposals.