Issue - meetings

To consider a report by the Head of Financial Services on the planned basis for the localisation of Business Rates.

Noted the planned basis for the localisation of Business Rates and agreed that an expression of interest in pooling with the County Council and other Cambridgeshire Districts be made to the Department for Communities and Local Government on the understanding that the governance arrangements is be based on no Authority losing from pooling and in noting that there would be the opportunity to review that decision later in the year.

By way of a report by the Head of Financial Services (a copy of which is appended in the Minute Book), the Cabinet were acquainted with the background to the introduction of the rates retention scheme designed to encourage Councils to be self-sufficient and to help them support local jobs, growth and protect the most vulnerable places.

Members were informed that the proposals focus on the distribution of business rate income rather than changes to the system of business rate taxation.  It was reported that the localisation of business was not intended to change the resources available to authorities in 2013/2014 but it would, over time, result in a higher proportion of resources going to growth areas.

Attention was drawn to an option in the scheme for local authorities to come together to form local pools for business rates income.  In considering the benefits of forming a local pool with the County Council and other Cambridgeshire districts, Members agreed that any arrangements should be based on ensuring that no authority loses out.  Having noted the deliberations of the Overview and Scrutiny Panel (Economic Well-Being) thereon, the Cabinet

RESOLVED

  (a)  that the planned basis for the localisation of Business Rates be noted; and

  (b)  that the Department for Communities and Local Government be advised of the Council’s interest in pooling with the County Council and other Cambridgeshire Districts on the understanding that the governance arrangements is based on no Authority losing from pooling and noting that there would be the opportunity to review that decision later in the year.

To consider a report by the Head of Financial Services on the planned basis for the localisation of Business Rates.

With the assistance of a report by the Head of Financial Services (a copy of which is appended in the Minute Book) the Panel was acquainted with details of proposals for the localisation of business rates, which would come into effect in April 2013. Information was also provided on the opportunities for local authorities to combine to pool their business rates income and the benefits which the Government envisage that this would present.

Although the legislation had not yet been passed, the Head of Financial Services explained that the information within the report reflected that which was currently available. He then drew attention to a number of specific aspects of the proposals that would need to be taken into account when the Council took a decision on whether to form a local pool for business rates income. Members noted that business rate income from the Enterprise Zone was not included in these proposals and that this income would be distributed throughout the Local Enterprise Partnership area.

During discussion on the proposals for pooling business rates income, Members were informed that it would operate on the principle that none of the authorities that were party to the agreement would be in a worse-off position than they would otherwise have been. There would then have to be agreement on what to do with any remaining money, which would require negotiation with the other authorities. Members noted that where there was growth, there were clear benefits of pooling, however, it could not be assumed that income from business would not go down and this might result in a significant overall reduction in Councils’ income levels.

It was reported that the County Council had modelled a number of different scenarios to identify the range of effects of pooling. Members were informed that this would include the impact of growth in one area of the County and a decline in another. Having noted that there would be an opportunity to withdraw from any pooling arrangements once the draft Local Governance Finance Report was published, it was

RESOLVED

that the Cabinet should be recommended

(a)  to note the planned basis for the localisation of Business Rates; and

(b)  to express to the Department for Communities and Local Government, the Council’s interest in pooling with the County Council and other Cambridgeshire Districts on the understanding that the governance arrangements will be based on no authority losing from pooling, and noting that there will be the opportunity to review that decision later in the year.