Essex County Council’s leader Cllr David Finch lobbied MPs yesterday for urgent clarity over the Government’s business rate reform plans.
Cllr Finch was invited to give evidence to the CLG Select Committee where he sought greater transparency on plans to let all local councils keep 75% of business rates from 2020/21 when central Government funding ceases, eventually moving to 100% retention.
In Essex, £625 million of rates are currently collected but just £304 million is spent locally – the rest goes back to the Treasury.
“Keeping business rates would give us the financial stability we need to realise our strategic ambitions for Essex and drive prosperity for all,” said Cllr Finch.
“But there are still too many unanswered questions to enable us to plan effectively for our future.
“We have not built 100% retention into our financial projections because we don’t have enough information, such as how much we could get, how the money will be distributed and what responsibilities will be devolved to us from Whitehall.”
When central Government grant funding comes to an end in 2020/21, the Council estimates a funding gap of £94 million.
Cllr Finch added: “We are an innovative council. We explore commercial opportunities, we investigate alternative ways of providing vital services, and we focus on ensuring we are efficient and effective in everything we do.
“But we simply don’t have enough money and we need the Government to trust and empower us by letting us keep 100% of our business rates, with no strings attached.”
If the Council, along with Southend Borough Council, district, borough and city councils, had been chosen to become a 100% retention pilot area, local councils would have received £38 million of extra funding, including £8 million for Essex County Council.
Cllr Finch said: “The loss of this funding is significant. It could have provided 550,000 care hours or fixed 16,000 defects on our highways network.
“It is unclear if the 75% scheme even helps. The additional 25% comes with a series of commitments, such as business rates being used to fund items like public health, which is currently funded by a separate grant.
“So we will lose the specific grant but maintain the requirement to deliver the service. The majority of funding under the 75% scheme is therefore merely a transfer of funding streams, it does not provide any additional money.
“We need greater clarity as a matter of urgency so we can plan safely for the future.
“It must be recognised that local government services cannot be switched off overnight, so the sooner we have clarity on this issue, the better.”