Overview

The Local Government Finance Bill aims to reform local government finance in England, primarily focusing on business rates and the introduction of new levies for infrastructure projects. It proposes changes to how business rates are collected and distributed, and introduces new powers for certain authorities to raise additional funds for economic development initiatives.

Description

Business Rates

The bill gives local authorities 100% retention of non-domestic rates (business rates), eliminating payments to the central government. It includes provisions for loss payments to compensate authorities for reductions in income due to list alterations. It also grants the Treasury the power to specify an indexation rate for non-domestic rating multipliers and to reduce these multipliers.

Council Tax

The bill amends the process for determining whether council tax increases are excessive, requiring the Secretary of State to determine and publish principles for assessing council tax levels.

Infrastructure Supplements

The bill empowers the Greater London Authority and certain mayoral combined authorities to impose levies ("infrastructure supplements") on non-domestic ratepayers to fund projects promoting economic development. These supplements are subject to conditions, including publication of a prospectus, consultation, and restrictions on how the funds can be used.

Other Local Levies

The bill allows billing authorities to create property owner arrangements and impose levies within Business Improvement Districts (BIDs), and extends the power to impose business rate supplements to mayoral combined authorities.

Government Spending

The bill's impact on government spending is complex. While it eliminates revenue support grants, potentially reducing central government expenditure, it introduces mechanisms for loss payments and potentially increased administrative costs for both central and local government. The exact financial impact will depend on the implementation of the new levies and the extent of loss payments required.

Groups Affected

• Local Authorities: Experience significant changes in funding, increased responsibilities for collecting business rates, and potential new income streams from infrastructure supplements and property owner levies.
• Businesses: May face increased business rates if multipliers are not reduced or new levies are implemented.
• Property Owners in BIDs: May be subject to new property owner levies.
• Mayoral Combined Authorities: Gain new powers to raise funds for economic development.
• Central Government: Potentially reduced spending on revenue support grants but increased administrative costs.

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