Local Government Finance

Christopher Chope Excerpts

Wednesday 7th February 2018 Commons Chamber

[Sajid Javid]

The hon. Lady’s local authority, Bath and North East Somerset, was part of a business rates pilot in 2017-18. As I said, we have extended that pilot, which gives the local authority the ability to take advantage of that and put in place incentives for local businesses to see growth. The council estimates that it can see millions of pounds of extra income from that, which I would have thought she would support for her local community.

The business rates pilots will help to test the system, to see how well it works in different areas and different circumstances. The purpose of the pilots was to have a broad distribution across north and south, urban and rural, and small and large. The pilot areas will keep 100% of the growth in their business rates if they expand their local economies, which is double what they can keep now. I can confirm that I will open a further bidding round for pilots in 2019-20 in due course. In expanding those pilots, we have responded to what councils have told us, and we are doing the same in other areas.

Rural councils express concern about the fairness of the current system, with the rural services delivery grant due to be reduced next year. In response, I can confirm today that we will increase that grant by £31 million in 2018-19. That is £16 million more than was proposed in the provisional settlement, taking the total figure to £81 million—the highest amount ever paid in rural grant, at a little over the sum paid in 2016-17.

We recognise that the so-called negative revenue support grant is causing concern. Changes in revenue support grant have led to a downward adjustment of some local authorities’ business rates top-up or tariff for 2019-20. We know we must address that problem, and we will consult formally on a fair and affordable set of options for doing so, with plenty of time to reflect on the findings before next year’s settlement.

Following discussions with the sector, we are continuing with the capital receipts flexibility programme for a further three years. That scheme gives local authorities continued freedom to use capital receipts from the sale of their own assets, to help fund the transformation of services and to release savings.

[Sir Christopher Chope (Christchurch) (Con)]

May I ask the Secretary of State about the negative revenue support grant? He has not actually said expressly that there will no longer be a negative revenue support grant. My local councils are saying that the Government cannot be trusted on this, and unless and until the Government commit themselves to saying there will not be a negative revenue support grant, they will have to budget on the basis that there may be one.

[Sajid Javid]

My hon. Friend makes a very good point. Such certainty is of course very important for many local authorities, including his own, and I hope I can now make the situation clearer. It is our intention to deal with the problem of the negative RSG, but we have yet to determine exactly the best way of doing so and providing support to the local authorities affected, and that is why it is right to consult on it. I absolutely commit to him that we will do so, and when we do—our plan is to do it in the spring—I hope that he and others will make an input to make sure that we get it right and really deal with this problem for his authority and many others.