With the 2025-26 financial year now closed and accounts preparation well under way, planning for 2026-27 is visible on the horizon.
Despite us now living with the first multi-year settlement in a decade, the Ministry of Housing, Communities and Local Government (MHCLG) has said from the outset that an annual consultation will still take place each year.
It remains to be seen whether this will prove any lighter than consultations under single-year settlements, especially as there should be relatively limited scope for change.
Those involved in business rates pools will be keen to influence future arrangements for the sharing of pooling gains and the ongoing treatment of the Adjustment Support Grant.
The £116m grant was introduced as a one-off measure to protect authorities whose core spending power would reduce because of changes made between the provisional and final settlement. This rebalanced the distribution of income from pools between tariff and top-up authorities, correcting an earlier assumption that pooling gains accrued entirely to tariff authorities (typically district councils) and moving instead to a 50:50 share.
While the one-off grant was intended to offset a reduction in funding, it was not committed for years two and three. This could be significant for some authorities, particularly when these councils are also supporting reorganisation, meaning capacity is stretched and opportunities for savings is limited.
It is also worth remembering that the arrangement now in play could be argued to be as imprecise as the original approach.
In practice, the distribution of pooling gains is a locally-agreed convention and varies across the 25 pooling areas and 188 councils affected. There is therefore a strong case for the MHCLG to better understand these local arrangements and reflect them more accurately within its distribution methodology.
Tracy Bingham is deputy chief executive (S151 officer) and executive director – resources and transformation at South Derbyshire DC
