The Welsh Government has warned that full devolution of business rates would leave 18 of Wales’ 22 unitary authorities worse off than under the current pooling arrangement.
Mark Drakeford, the Welsh Government’s cabinet secretary for finance and local government, told an Assembly committee that England’s current approach was 'very complex'.
The Welsh assembly in Cardiff
'Anything we do in Wales would need to be simpler, grounded in clear evidence and framed within our approach to funding local government,' he said.
Only four Welsh authorities would benefit from business rates retention.
'There are 18 local authority areas in Wales that would be negatively affected, some of them very badly affected,' he told the committee, but partial rates retention to incentivise growth was worth exploring.
'I’m more open to that, and we’re open to it explicitly in the Cardiff capital city deal arrangements,' he added.
Asked if this would address businesses’ concerns about where the rates were spent, Mr Drakeford said councils should continue providing better information about their spending on roads, refuse collection and buses.
The Government is drawing together an advisory group on alternative funding systems such as Land Value Taxation. The group includes LVT expert Prof Iain McLean of Oxford University and a Scottish Government official who worked on a Scottish funding review last year.
Mr Drakeford said the aim was to produce, by the end of this Assembly term, a 'much more real set of alternatives than just a theoretical rehearsal of the pluses and minuses of different approaches'.
Last year George Osborne, as chancellor, proposed that English councils be allowed to keep local business rates. Central Government grants would disappear by 2020 except for safeguarding payments for authorities whose business rates income would be low.
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