England & Wales Economy and regeneration, Finance

The Local Government Finance Bill has fallen – what now?


The announcement of the snap general election threw Parliament into chaos, and one of the casualties was the Local Government Finance Bill, which was making its way through the House of Commons. Where does this leave local government? asks Jennifer Glover.

The Local Government Bill has now fallen, meaning it will need to be re-submitted by the next government after June 6th – that is, if it remains on the policy agenda. Even if the next administration supports the idea, there is quite a real chance that the legislation supporting 100% local business rate retention will be sidelined amidst all the frantic Brexit-related legislative activity.

So where does that leave local government?

Well, for those who were concerned that the Bill was being rushed through without adequate time to consider the true impact (as the NAO was) this could come as something of a relief. It could give more breathing space to think through the details and to conduct further consultations or even to go back to the drawing board.

However, this new development does mean that councils are working in an even more uncertain financial climate. Our 2017 State of Local Government Finance Survey, conducted earlier this year, showed that even before this happened, four in five senior council decision-makers had none or very little confidence in the sustainability of local government finance. Now that the timeline for 100% BRR has been thrown off, working out how to budget and invest will be that much more difficult.

Without the concrete promise of future financial incentives for investing in local economic growth strategies, councils may now choose to abandon these programmes to focus on service delivery. But they risk being left in the lurch if the policy is revived and they haven’t laid the groundwork for a healthy business rate tax base. And given that this year’s budgets have already been signed off, there may be limited scope for changing course anyway.

What about the 100% BRR pilots and new mayoral powers? 

Aside from the general uncertainty, there are more specific impacts for some areas. Some councils were expecting to start a 100% BRR pilot soon, the start of which has now been indefinitely delayed. And for the new mayors of combined authorities, some of their devolved powers were contained within the Bill and their status is in limbo.

What now?

Regardless of the outcome of the general election, it would probably be worthwhile maintaining the momentum of these discussions on the assumption that the policy will pop back up again at some point soon, to be prepared to fight for a system that will work to best effect.

This article is taken from April’s local government finance newsletter – sign up here. LGiU is focusing on three policy areas this year: Finance, Democracy and Services.