Reviewing and reforming local government finance

This note explains the significant changes in local government finance in England during the 2010s. It also sets out some issues that are the subject of debate, and proposals for reform, in the early 2020s. Section 1 explains the workings of the Business Rates Retention Scheme, introduced in 2013. Section 2 sets out various Government proposals for changes to business rates retention during the late 2010s. Section 3 describes the Fair Funding Review, a consultation process which took place between 2016 and 2018 and has been paused, but not abandoned, since then. Section 4 presents details of debate around changes to local grant funding from the early 2020s. Section 5 describes the 2020-21 ‘fundamental review’ of business rates. Section 6 sets out the business rate policies that have emerged in the first few months of the 2024 Labour government.

The policies covered in this note have effect in England only. Responsibility for business rates, and for local government generally, is devolved to Scotland, Wales and Northern Ireland. For a more general explanation of the business rates system in England, see the Library briefing paper Business rates. For more details on the 2023 revaluation of business rates in England, Wales and Scotland, see the Library briefing paper Business rates: the 2023 revaluation.