The Institute for Fiscal Studies (IFS) has published a report titled: “English local government funding: trends and challenges in 2019 and beyond”. The report confirms that councils now rely much more on local tax revenues for their overall funding, which may lead to increased pressure and scrutiny of mandatory reliefs, as well as a postcode lottery for discretionary relief.
Key excerpts for charities include:
- “Council tax is budgeted to account for nearly half of revenue, up from 40% in 2009–10 (and 34% if we exclude the council tax that central government used to pay on behalf of low-income residents). Business rates retained under the BRRS also contribute around 30% of revenues, up from 0% back in 2009–10. This could lead to increased pressure and scrutiny of mandatory reliefs, and a postcode lottery for discretionary relief. “
- “Looking further ahead, the vast majority of councils’ funding is set to come from council tax and business rates from 2021–22 onwards. This is because councils are set to move from retaining 50% to retaining 75% of business rates revenues, with grant funding cut accordingly to ensure the reform is revenue-neutral at the point of implementation.“
- “As well as taking decisions about the overall level of funding to provide to councils, the next government will have to take decisions about how that funding should be distributed between them. Costs are likely to rise at different rates for different councils – because of differences in demographic and socio-economic trends. And the amount councils can raise from council tax and retained business rates varies significantly.”