Commentary on Sections Part 5: Non-Domestic Rates Section 70: Local retention of non-domestic rates
127.Schedule 8 to the Local Government Finance Act 1988 provides that non-domestic rates revenues collected by billing authorities must be paid to the Secretary of State who then distributes them to local authorities. This section inserts new provisions into paragraphs 4 and 5 of Schedule 8 to the 1988 Act amends section 99 of the 1988 Act and amends section 38 of the Local Government (Wales) Act 1994. The amendments enable the Secretary of State, as respects England, and the National Assembly for Wales, as respects Wales, to put in place a scheme to allow the local retention of non-domestic rates.
128.This will allow the Secretary of State and the National Assembly for Wales to implement a local authority business growth incentives scheme, announced by the Chancellor of the Exchequer in the Pre-Budget Report in Autumn 2002. The Deputy Prime Minister and the Chancellor of the Exchequer jointly launched a consultation document on 4 July 2003 which outlines the principles behind the scheme and suggests a number of options. The scheme will provide a financial incentive for business and local authorities to work in partnership to maximise local economic growth and regeneration while at the same time generating additional resources to address local priorities.
129.The section confers powers on the Secretary of State and the National Assembly of Wales to make rules regarding the local retention of rates revenue. New paragraph 4(4A) (inserted by subsection (1) of section 70) allows some or all of a billing authority’s rates revenue to be retained, based on rules. New paragraph 4(4B) excludes the City of London Corporation from the scheme. However, the Secretary of State is able to provide for the local retention of rates revenue of the Corporation under existing City of London Corporation legislation . New paragraph 4(4D) requires the Secretary of State to obtain consent of the Treasury when setting up the scheme in England. Treasury consent would not be required in Wales.
130.Subsection (2) of section 70 amends paragraph 5 of Schedule 8 to the 1988 Act, to require the billing authority to notify the Secretary of State, as respects England, and the National Assembly for Wales, as respects Wales, of the amount of non-domestic rates revenue that it is retaining locally under the rules set by the Secretary of State or the National Assembly for Wales. It also requires the billing authority to arrange for the District Auditor to certify the amount so retained. Subsection (3) of section 70 requires the Audit Commission to forward a copy of this certificate to the Secretary of State or National Assembly for Wales.
131.Subsections (4), (5) and (6) of section 70 amend section 99 of the Local Government Finance Act 1988 to enable the Secretary of State to allocate the retained revenue between major precepting authorities, as he sees fit. This enables the allocation of the retained revenue between various tiers of local government. Subsections (7), (8) and (9) of section 70 amend section 38 of the Local Government (Wales) Act 1994 to allow the National Assembly for Wales to do the same thing in Wales. Paragraph 58 of Schedule 7 to the Act amends the 1994 Act to facilitate the Assembly’s new regulation-making powers.