Responses to Government Consultations on the Fairer Funding Review and Business Rates proposals
- Meeting of Resources and Governance Scrutiny Committee, Thursday, 7th March, 2019 2.00 pm (Item 21.)
Report of the City Treasurer attached
This report provides an overview of the proposed reforms to Local Government Financing and the Council’s response to the two most recent government consultations which are Business Rates Retention Reform and a review of local authorities’ relative needs and resources.
The Committee considered a report of the City Treasurer, which provided an overview of the proposed reforms to Local Government Financing and the Council’s response to the two most recent government consultations which were Business Rates Retention Reform and. A review of local authorities’ relative needs and resource.
The City Treasurer referred to the main points and themes in the report which included: -
· In October 2015 the Government committed to further reforms to Business Rates retention followed by consultations in July 2016, February 2017 and December 2018. In February 2016, the Government announced there would be a review of relative needs and resources, followed by consultations in July 2016, December 2017 and December 2018;
· The two recent consultation papers were the next steps in the Government’s programme of reform to local finance which aimed to provide a fairer and more transparent mechanism for allocating formula grant and to give Councils greater control over the money they raised locally;
· From 2020/21, there would be significant changes to Local Government financing;
· The Council was engaging with central government and other interested bodies through formal consultation responses and working groups to ensure the impact of the potential changes on local government, and particularly cities was recognised;
· In relation to Business Rates Reform Manchester had been involved in a number of programmes to maximise the resource available in the region including a Business Rates Pool across Greater Manchester (GM) and Cheshire, the Business Rates Growth Retention Scheme 2015 and a three-year 100% retention pilot from April 2017 to March 2020; and
· With regard to the review of relative need and resources the Council was working closely with the Ministry of Housing, Communities and Local Government (MHCLG), Local Government Association (LGA) and other Local Authorities (particularly Core Cities) to ensure the circumstances of metropolitan cities were represented in the review, specifically in relation to the impact of deprivation on the need to spend.
Copies of the Council’s responses to the two consultations were appended to the report for the Committees consideration.
Some of the key points that arose from the Committees discussions were: -
· Members welcomed the substantive and detailed responses, noting the cuts imposed on the City Council;
· Thanking the City Treasurer and Deputy City Treasurer for the work that had been undertaken to produce the detailed and compelling submission;
· Supporting the argument put forward that deprivation needed to be a material consideration in the funding formula and not simply calculated on population figures alone, noting the continued impact of austerity and the financial pressures experienced as a result of increased social care costs;
· Welcoming the inclusion of the issues arising as a result of the significant student population, and the associated loss of revenue, within the response;
· The responses should have included recommendations that Private Landlords are charged Business Rates;
· Was the resource allocated to Business Rates appeals sufficient; and
· In relation to Business Rates and the expanding University estate, what discussions had been had with other core cities, with similar large establishments;
The City Treasurer stated that it was very difficult to agree a funding formula that fits all due to the different pressures and demographics experienced in cities and this presented a challenge nationally. In relation to Business Rates and those large estates that were exempt she said discussions had been conducted with other core cities to explore this issue further.
It was noted that the Committee were of the view that the City Council should be recommending private landlords are charged business rates. The City Treasurer explained some of the work in this area and that the City Council was continuing to push for a position that recognised the financial impact of students on the council's income.
The City Treasurer stated that the calculation of the resource required for the number of Business Rates appeals had been modelled using the available data, commenting that this was robust and had been signed off by the external auditor. She further advised that work was underway with other core cities around the issue of the impact on funding of student accommodation and the different options available.
The City Treasurer acknowledged the comment regarding the pressures experienced regarding the cost of social care, and modelling of this continued so as to understand and the scale of this challenge in Manchester, also taking into consideration other factors such as the impact of the roll out of Universal Credit and other initiatives. She further commented that this had been frustrated due to the uncertainty around the potential changes to funding for adult social care with the Green Paper now expected in Spring 2019.
The City Treasurer responded to a question from a Member regarding the possibility for a judicial review if the proposed formula was imposed by stating that she could not pre-empt the outcome of the consultation, however all options would be considered.
The Committee notes the report.
- MCC Response to Consultations covering report, item 21. PDF 386 KB
- Appendix 1 - MCC Business Rates Retention Consultation Response, item 21. PDF 374 KB
- Appendix 2 - MCC Fair Funding Consultation Response, item 21. PDF 983 KB