The government has agreed to publish the provisional and final local government finance settlement to an earlier timetable, starting from this year.
Minister for Local Government Rishi Sunak said that the government accepted all of the recommendations of a review into the business rates system carried out by HM Treasury director general Andrew Hudson, published this week.
The review recommended that the provisional settlement be published on or around 5 December each year, with the final settlement produced by 31 January.
It said: “Risks would be reduced if there was a clearer timetable for decisions throughout the year, leading up to the publication of the provisional and final settlements.
“This timetable should be established and agreed more clearly in advance with all relevant departments across central government, and should allow enough time for all the stages of the work.
“This approach would be of benefit within central government, and also to local authorities trying to set their budgets.”
The provisional settlement date has slipped to later in the calendar over recent years.
Since 2012, the provisional settlement has been announced between 15 and 19 December, compared to late November or very early December in the 2000s.
The final settlement has not been announced until the first week of February rather than the last week of January.
Hudson’s review said: “This all allows less time for scrutiny, and less time for local authorities to set budgets. In some cases, councils have even had to set their final budgets for the year based on the provisional settlement.
“While this is legal, it does not suggest a robust system.
“Generally local authorities are frustrated both by the late announcement of the figures, and also by the fact that they often get no notice of when that announcement is coming.”
Elsewhere in the report, Hudson recommended a number of measures to improve capacity within the local government finance directorate of the Ministry of Housing, Communities and Local Government.
He said that the increasing complexity of the business rates system had put pressure on the team.
Between 2017/18 and 2018/19, the number of variables needed to calculate the local government settlement had increased from 78 to 146, due to the expansion of business rate pilots and the 2017 revaluation, the report said.
Hudson called on the department to produce a staffing plan to ensure appropriate skills are in place and to strengthen stability.
In a letter to Clive Betts, chair of the Housing, Communities and Local Government select committee, Sunak MP confirmed the department will accept all of Andrew Hudson’s recommendations, and said the department is aiming to publish the provisional settlement for 2019/2020 on 6 December.
He said: “We recognise taking a more planned approach towards the provisional local government finance settlement in future will be fundamental to ensuring local authorities are given more certainty, and the time and space to consider their financial positions for the coming year.”
