Capital gains: What does the Local Government Resource Review mean for London?

The LGRR has the potential to transform the way that local government finances are allocated in the future and opens up the opportunity for London local authorities to work together in a pan-London business rates pool.

Report published on 23 October 2011 by Kieran Larkin

The Local Government Resource Review (LGRR) has the potential to transform the way that local government finances are allocated in the future.  The reforms aim to introduce a strong incentive for local economic growth, increase the autonomy of local government, while at the same time ensuring that all local authorities are able to continue to meet the needs of their areas.

In July, the Government launched a consultation on the LGRR.  As it stands, London local authorities could see the way that they are funded change considerably.  Many local authorities will be able to take advantage of the opportunities created and will be financially rewarded for supporting new development and business expansion.  New revenues may be generated and used to fund infrastructure that enables the capital to continue to grow.  Inevitably, just as some local authorities may benefit from the system, some that do well financially under the current arrangements may not see the growth they’ve seen in the past.  The LGRR also opens up the opportunity for London local authorities to work together in a pan-London business rates pool.

This research note sets out how the LGRR will impact on London local authorities, drawing on Centre for Cities’ recent report Room for Improvement.  It considers how London local authority’s business rates revenues have grown over the past decade, the role of pooling in the London context, how the reforms could be introduced and the implications of the LGRR consultation.

Selected coverage • Planning • London Loves Business • eGov Monitor • Public Finance.

We would like to thank Future of London for their involvement in this research.

Contact us

Senior Consultant, City Economics at Arup