Issue - items at meetings - Business Rates Retention forecast 2013/14

Report of the Director of Finance (copy to follow).

1.                  That the business rates forecast with the amount to be retained of £49.235m as set out in the NNDR1 2013/14 form at appendix 1 be agreed;

2.                  That the technical issues relating to future successful business rate appeals and refunds raised in the response to the provisional grant settlement set out in appendix 2 to the report and the potential impact on the budget be noted; and

3.                  That the positive outcome of the independent review of the council’s current systems for identifying changes to the rating list and informing the Valuation Office set out in paragraph 3.25 of the report and the improvements suggested be noted.

Note: The special circumstances for non-compliance with Council Procedure Rule 23, Access to Information Procedure Rule 5 and Section 100B(4) of the Local Government Act 1972 (as amended),  (items not considered unless the agenda is open to inspection at least five days in advance of the meeting) was that further relevant guidance from the Department for Communities and Local Government (CLG) that was required to calculate the business rates forecast had not been received.

110.1    The Director of Finance introduced the report which sought approval of the business rates forecast for 2013/14 and to approve the proposed NNDR1 for 2013/14.  The Director noted that the system for local government finance was changing and that 50% of the locally collected business rates would be retained by local authorities, which meant that this replaced the government grant that was previously issued and was not therefore additional revenue.  The level of business rates would remain set by national government and the valuation office and local authorities would also be liable for 50% of the costs of any successful business rates appeals.  This was an important factor as officers had had to seek to predict the level of successful appeals which could go back to 2012 and the potential cost to the council to meet those appeals.  Having received further guidance from the government sine the report was published; officers currently predicted that there was a £7m liability as a result of successful appeals for the council to fund.  She stated that further guidance was expected and therefore delegated authority was sought to enable her to take any action required in light of that guidance.

110.2    The Chair noted the report and stated that the council was required by law to set the rate and was now facing a £7m cost as a result of the changes imposed by the government.  He was concerned that the city was known for its digital businesses and these attracted very little business rates which, whilst they were welcome, did not help the situation.  He had raised the matter with the Minister concerned who had said he would look at the matter but as yet had not responded.

110.3    Councillor G. Theobald welcomed the change in the system and stated that it was appropriate for the government to set the rate at a national level.  He wished to thank the officers for the report and their briefings on the matter and stated that there had always been appeals against the level of business rates.  He had concerns over the work of the valuation office and the number of outstanding appeals that remained.  He also felt that the council should be able to pursue rateable values for empty properties such as the Co-op building on the London Road.

110.4    Councillor Mitchell stated that the council was being placed in a difficult position with the government setting the rates and then expecting the council to pick up half of the costs of the resultant appeals since 2010.  The budget pressure of £7m was a concern and until further information was received it appeared it could be a full-year cost for 2013/14; however she noted that the DCLG had indicated that the matter was being reviewed and a ‘safety net’ may be provided.  She therefore suggested that the council should work with the LGA and other councils to take a collaborative approach and raise the concerns with the government.

110.5    Councillor West stated that he was concerned about the potential impact on the budget of the additional £7m cost and the impact on local businesses.

110.6    Councillor Hamilton stated that he was concerned that information and guidance on this matter was still being issued by DCLG and felt that it was essential that the Director of Finance was given delegated authority to be able to take matters forward.

110.7    The Chair noted the comments and stated that the council was committed to attracting businesses to the city but noted that the retention of a percentage of the business rates collected by the council was not new money as the previous government grant had been withdrawn.  He then put the recommendations to the vote.

110.8    RESOLVED:

(1)         That the business rates forecast with the amount to be retained of £49.235m as set out in the NNDR1 2013/14 form at appendix 1 be agreed;

(2)         That the technical issues relating to future successful business rate appeals and refunds raised in the response to the provisional grant settlement set out in appendix 2 to the report and the potential impact on the budget be noted; and

(3)         That the positive outcome of the independent review of the council’s current systems for identifying changes to the rating list and informing the Valuation Office set out in paragraph 3.25 of the report and the improvements suggested be noted.