Draft Non-Domestic Rating (Rates Retention, Levy and Safety Net and Levy Account: Basis of Distribution) (Amendment) Regulations 2020

Naz Shah Excerpts

Tuesday 10th November 2020 General Committees

[Naz Shah (Bradford West) (Lab)]

It is really an honour to serve under your chairmanship, Ms Ali.

In recent times, especially through the covid pandemic, local authorities have shown how they can provide the necessary localised support to communities. When the need came, they adapted their services. They housed those who were homeless, provided food parcels for those shielding and literally became a Government at the local level.

It is not just in times of pandemic, but more generally that local authorities have a better understanding of their local communities and businesses. They are therefore able to work with local people to ensure that businesses in the UK can genuinely thrive. After a decade of reductions in funding and rising demand, from which we seem to be beginning to emerge, councils, along with the rest of the nation, have faced the impact of the covid-19 pandemic on their citizens, staff, services and budgets.

Estimates by the Institute for Fiscal Studies suggest that another £2 billion might be needed this year to meet all the pressures and non-tax income losses that councils have experienced and will continue to experience as a result of covid-19, but that that could rise to £3.1 billion, depending on whether council assumptions about the end of the pandemic are correct. Changes in legislation that provide formulas to support local authorities and their budgets in such times are therefore hugely important and we certainly welcome that.

Although I understand that the changes in the statutory instrument are technical, and some relate to individual local authorities, I would be grateful if the Minister provided further reassurances on whether the Government will make adjustments to business rate retention calculations next year to take into account the impact of covid-19 rates relief.

As the Minister knows, following the measures announced in March, 40% of business rates in 2020-21 are being covered by retail reliefs of approximately £10 billion. However, business rates collection is likely to be down, despite the increased reliefs, with current predictions by councils suggesting a £1.6 billion shortfall to the public purse. The 2021 calculations, which will be made next year, will therefore be potentially less straightforward due to the impact of the covid-19 pandemic on collection. The calculation will need to be adjusted to deal with the retail reliefs. I would welcome the Minister’s outlining any further plans that the Government have to deal with that specific shortfall.

Additionally, will the Minister provide an update on how the Department plans to deal with the shortfall arising from irrecoverable uncollected local taxation in 2021? Will the Government cover all the shortfalls in planned non-tax income and local tax revenues, including business rates? The Minister will recall that the Government have a line that they will cover whatever is needed for local councils. After a decade of cuts and then taking on the burden of a pandemic, it is important that local authorities are supported so that local people, communities and businesses are also supported.