Extra money raised under the Government's policy of giving councils complete control over business rates should be used to plug gaps in spending on services, local government leaders have demanded.
They have also welcomed a move to allow appeals over a new system of business rates to be handled centrally.
They say councils have been forced to divert £2.5bn away from stretched local services over the past five years to cover the risk of business rates appeals.
Cllr Claire Kober, chair of the Local Government Association's (LGA) Resources Board, said the policy of devolving control of business rates should work for the benefit of local communities and businesses.
Her comments follow a report from the National Audit Office warning that the 'key question' over the new policy was whether there is enough money in the system for services to be delivered properly.
Cllr Kober said: 'It is vital that we maximise the potential that the further localisation of business rates offers to our local communities and businesses.
'While it won't in itself solve the long-term funding challenges facing councils, it is absolutely critical to ensure any new system works effectively.
'As the NAO has rightly recognised, it has to fundamentally be underpinned by a proper needs assessment implemented in a way which balances rewarding councils for growing their local economies, but avoids areas less able to generate business rates income from suffering as a result.'
