Business rates blow could leave Lancashire over £10m worse off next year

Almost all councils in Lancashire were part of the business rates pilot
Almost all councils in Lancashire were part of the business rates pilot

A pilot scheme which has allowed councils in Lancashire to keep more of the business rates raised in the region will end after just a year – potentially costing the county almost £11m.

Lancashire was chosen to take part in the trial which permits local authorities to retain 75 percent of any growth in income from the charge. Previously, they were allowed to keep only 50 percent of that increase, with the rest sent to government for redistribution nationally.

It is estimated that the arrangement will see an extra £10.8m retained in the county during 2019/20 than would otherwise have been the case.

The pilot was only ever intended to last for a year, but it was expected to be rolled out nationally from April 2020 – meaning Lancashire would have experienced an unbroken transition to the permanent system.

But the government last week postponed the nationwide introduction for twelve months – and has now said that only areas which have been given devolved powers can continue with any existing pilot schemes. Lancashire is not among them.

The full rollout has been delayed so that it can be considered in line with the so-called “fair funding review” of council finances – which has itself been put back until 2021.

Preston City Council’s cabinet member for resources, Martyn Rawlinson, said that the authority was “disappointed” by the move.

“There has already been a significant amount of effort from everyone involved in the pilots, as the funding was helping to driving forward Lancashire-wide growth for the benefit of the region.

“We haven’t been notified if our previous [50 percent] arrangement will continue or any other pooling arrangement will be put into place, and will be writing to the Minister asking for an outline on the future position,” Cllr Rawlinson added.

Peter Wilson, deputy leader of Chorley Council said that the lack of certainty being offered by the government was making it “extremely difficult to plan ahead”.

“It’s a sign of a government that doesn’t know what it is doing and has become so tangled up in Brexit that everything else seems to have no forethought or planning,” Cllr Wilson said.

Meanwhile, a spokesperson for Lancashire County Council said that the authority was “considering the implications” of the decision.

Fourteen out of Lancashire’s fifteen councils came together to bid for pilot status, agreeing to pool the additional money received between them. Lancaster City Council did not take part because of concerns over the removal of a government guarantee that it would be no worse off than the previous year if it entered the pilot.

Under the arrangements this year, £540,000 of the extra cash was set aside as a contingency fund, £2.5m for sustainability and growth projects and the remaining £7.8m split across the county’s councils.

The districts have shared 56 percent of the third tranche, with the county council receiving 17.5 percent, the standalone councils in Blackpool and Blackburn getting 25 percent and the Lancashire Fire and Rescue Service in line for 1.5 percent.

Councils in some areas with devolution deals have been trailing 100 percent retention pilots since 2017 and these will continue next year. Lancashire has struggled for several years to agree a model for devolution in the county.