Introduction
1. The Local Government Association (LGA) is here to support, promote and improve local government. We will fight local government's corner and support councils through challenging times by making the case for greater devolution, helping councils tackle their challenges and assisting them to deliver better value for money services.
2. This response has been agreed by Lead Members of the LGA Economy and Resources Board.
Question 1: Do you agree that a more sophisticated calculation will be required to ensure that future under-indexation compensation remains accurate?
3. As the consultation says currently the two multipliers change only by the same amount and since the business rates retention system was set up in 2013/14 the small business rates multiplier has been used to index key elements in the system such as the funding baseline and top-ups and tariffs. It has also been used to calculate under-indexation compensation.
4. The Non-Domestic Rating Act 2023 gives ministers power to decouple the small business rates multiplier from the standard multiplier. If ministers choose to exercise this power, we agree that a revised calculation, on the lines discussed in this consultation, will be necessary to ensure that under-indexation compensation remains accurate.
5. We note that the Act gives ministers powers but it does not compel them to set the multipliers differently to how they are set currently. If the gap between the multipliers remains at 1.3p, as at present, there would be no need for a different calculation to that carried out at present.
6. DLUHC started to discuss the implications of the change with local government officers and the LGA in July 2023. It has become apparent that the additional data required to complete the NNDR forms as outlined in the consultation will require a change to the software used and the LGA has heard that at least one major software provider considers that this change is unlikely to be achievable for the start of 2024/25.
7. We are sympathetic to using the flexibility in the Act to vary multipliers, particularly if it can help businesses, but we consider that the Government should not go ahead until it is confident that both local government and software providers can deliver the change. We therefore call on the Government to keep the gap between the multipliers the same as at present for 2024/25 and to implement the changes when local government and software providers are sure that they can deliver the change.
8. It is also important that any new burdens as regards software or administration costs are covered by the New Burdens Doctrine.
Question 2: Do you agree that more dis-aggregated data will be required from NNDR forms to make a more sophisticated under-indexation compensation calculation?
9. Yes, we agree that if ministers decide that the multipliers diverge it will be necessary to have more disaggregated data from the NNDR forms.
Question 4: Do you agree that the proposed changes to indexing Baseline Funding Levels and Tariffs/Top-Ups are required, and if so, that a weighted average should be used to index Baseline Funding Levels and Tariffs/Top-Ups from 2024/25?
11. Yes, we agree that, if the divergence between the multipliers were to increase, continuing to use only the change in the small business multiplier (or the standard multiplier), could have a significant impact on authorities and that the proposed changes to indexing Baseline Funding Levels and Tariffs/Top-Ups would be required. For reasons stated above we consider that this should be implemented from 2025/26 at the earliest.
Question 5: Do you agree that the weighted average should initially be delivered by a proxy based on existing business rates data, and it should be fixed until the next revaluation?
12. Yes, we agree that if and when the change is introduced a weighted average of data should be used rather than organise a bespoke data collection. The proportions within individual authorities are unlikely to change substantially between revaluations but this should be kept under review.
Question 6: Do you agree that the approach to indexing Designated Area baselines needs to be reviewed to ensure that growth is still measured and retained locally in real terms?
13. Yes, we agree that if and when the multipliers diverge that the approach to indexing Designated Area baselines will need to be reviewed.
Contact
Mike Heiser
Senior Policy Adviser
Phone: 020 7664 3265
Mobile: 07876 578189
Email: [email protected]