The National Audit Office (NAO) has warned that the government’s plans to allow full local retention of business rates may not be delivered on time, and will be hampered by low funding of the department for communities and local government (DCLG).
DCLG is aiming into introduce the changes by 2019-2020, but the NAO has warned that there are issues “have not been fully examined in the department’s work to date”.
Meg Hillier MP, chair of the Public Accounts Committee, which scrutinises government spending, said there are concerns over how the retention scheme will impact “funding for cash strapped local authorities which have to balance support for local businesses with collecting the money needed to run public services.”
The local retention of business rates is intended to allow councils to reinvest taxes in the areas where they are collected, and so boost the local economy.
A Government spokesman said: “As the NAO recognises, we’ve made great progress towards introducing 100 per cent business rates retention by 2020.
“Local government has campaigned for over a decade for this. So working closely with them, we’re designing a system that helps promote economic growth.
“Alongside these reforms, we’ve given over £200 billion to local authorities through the historic four-year funding settlement. This gives them the certainty they need to plan ahead with confidence."
Amyas Morse, head of the NAO, said: “The key question is whether there is enough money in the system to let services be delivered on the right scale and for self-sufficiency to be seen to succeed.”