5.3 It is proposed that the tier split for Fire and Rescue Authorities remains unchanged from the current 1% of business rates across the areas they cover and therefore they are not in scope for the reforms outlined in this paper. 5.4 In considering whether there should be reform of the tier split mechanism for local authorities going forward two questions need to be addressed. Firstly, has the current tier split operated as anticipated and met the objectives of minimising the risk carried by county councils and providing significant incentives for district councils? Secondly, do those objectives still hold true and is the tier split in its current format the most appropriate way of meeting the objectives of the new system? Distribution of risk and reward in the current tier split 5.5 The table below summarises growth above baseline funding levels by class of authority, based on 2018-19 NNDR1 (National Non-Domestic Rates 1 form) returns. The table includes growth from business rates pilots. The table does not include the impact of the levy on growth or safety net payments so does not represent the income actually retained by local authorities. Classification of Local Aggregate Aggregate Growth as a Authority Local Baseline proportion of Growth (£m) Funding Baseline Funding (£m) Level Unitary Authorities 407 2,396 17% Metropolitan Districts 433 2,971 15% Shire Counties 105 2,565 4% Shire Districts 612 551 111% London Boroughs 584 2,127 27% Greater London Authority 317 1,039 31% Fire & Rescue Authorities 17 352 5% 5.6 Although Shire Districts and London Boroughs have experienced similar absolute levels of growth (~£600m) since 2013/14, it is also clear that Shire Districts have seen significantly higher growth than any other classification of local authority when this is expressed as a proportion of baseline funding. Unsurprisingly Shire Counties (and Fire and Rescue Authorities) have only seen very small amounts of growth relative to their baseline funding levels as they are top-up authorities.
5.3 It is proposed that the tier split for Fire and Rescue Authorities remains unchanged from the current 1% of business rates across the areas they cover and therefore they are not in scope for the reforms outlined in this paper. 5.4 In considering whether there should be reform of the tier split mechanism for local authorities going forward two questions need to be addressed. Firstly, has the current tier split operated as anticipated and met the objectives of minimising the risk carried by county councils and providing significant incentives for district councils? Secondly, do those objectives still hold true and is the tier split in its current format the most appropriate way of meeting the objectives of the new system? Distribution of risk and reward in the current tier split 5.5 The table below summarises growth above baseline funding levels by class of authority, based on 2018-19 NNDR1 (National Non-Domestic Rates 1 form) returns. The table includes growth from business rates pilots. The table does not include the impact of the levy on growth or safety net payments so does not represent the income actually retained by local authorities. Classification of Local Authority Aggregate Local Growth (£m) Aggregate Baseline Funding (£m) Growth as a proportion of Baseline Funding Level Unitary Authorities 407 2,396 17% Metropolitan Districts 433 2,971 15% Shire Counties 105 2,565 4% Shire Districts 612 551 111% London Boroughs 584 2,127 27% Greater London Authority 317 1,039 31% Fire & Rescue Authorities 17 352 5% 5.6 Although Shire Districts and London Boroughs have experienced similar absolute levels of growth (~£600m) since 2013/14, it is also clear that Shire Districts have seen significantly higher growth than any other classification of local authority when this is expressed as a proportion of baseline funding. Unsurprisingly Shire Counties (and Fire and Rescue Authorities) have only seen very small amounts of growth relative to their baseline funding levels as they are top-up authorities.
Technical%20Paper%202%20Tier%20Splits%20Safety%20Net%20and%20Levy%20March%2018.docx