business rates: the latest developments

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Business Rates: The Latest Developments. Neil Benn. The Presentation. Basics of the new scheme Baseline issues / SPARSE campaign Latest DCLG plans What happens next?. What Happens Now. Formulae assess need Deduct what you might raise from council tax Pay the balance as cash - PowerPoint PPT Presentation


  • Neil Benn

    Business Rates:The Latest Developments

  • The Presentation

    Basics of the new scheme

    Baseline issues / SPARSE campaign

    Latest DCLG plans

    What happens next?

  • What Happens Now

    Formulae assess need

    Deduct what you might raise from council tax

    Pay the balance as cash

    Limits on year-to-year changes

  • What Happens Now

    District councils collect rates and send them to Government

    Everything else is irrelevant

  • Basics

    Target funding level

    Target business rates collection

    Target rates > funding pay tariff

    Target rates < funding receive top-up

  • Basics

    Districts still collect rates

    Notionally shared between districts, counties, fire

    Funding target

    Formulae assess needsDeduct what you might raise in council taxTarget is the balanceLimit on year-to-year change

  • SPARSE Campaign

    Close gap to urban from 60% to 50%

    Changes to EPCS and domiciliary social services

    Specific mention in DCLG response

  • SPARSE Campaign

    Our council tax is higher

    So:We are relatively over-providing; orWe are relatively inefficient; orWe are relatively under-funded

    Hard evidence is difficult to gather

    DCLG is not looking for any

  • Baseline / Funding Target

    Further cuts 11% on average for 2013-14

    Up to 4% returned through New Homes Bonus

    Transfers of function?


    Locked-in for 10 years

  • New Scheme Tier Splits

    Unitary with Fire

    Area collects 144m in ratesAssigned 100% = 144m in ratesFunding target 191mTop-up = 191m - 144m = 47mEach 1% change in rates is 1.44mWhich is 0.8% of funding

  • New Scheme Tier Splits

    County without Fire

    Area collects 194m in ratesAssigned 20% = 39m in ratesFunding target 105mTop-up = 105m - 39m = 66mEach 1% change in rates is 0.39mWhich is 0.4% of funding

  • New Scheme Tier Splits

    Shire District

    Area collects 32m in ratesAssigned 80% = 25m in ratesFunding target 4mTariff = 25m - 4m = 21mEach 1% change in rates is 0.25mWhich is 5.7% of funding

  • Levies

    To fund a safety net for losers

    On disproportionate gains

    A 1% increase in rates should cause the same increase in funding everywhere

  • Levies

    Huge levies on shire districts?

    Boosts for shire counties?

    How far in arrears for the calculations?

  • Levies

    Authority invests 5m in a scheme to generate 1m p.a. rates

    N Warwickshire would keep about 100,000

    Northumberland would keep all 1m

  • Safety Nets

    To protect local services

    Based on funding changes since start of scheme

    No protection for year-on-year falls

  • Safety Nets

    A 10% safety net on scheme income:

    Would restrict Surreys cuts to 1.7%

    Would restrict Brecklands cuts to 6.2%

    Would restrict Westminsters cuts to 7.0%

  • Pooling Arrangements

    Minimise risk by pooling with others

    but also reduces potential gain

    Weakens incentive

    You pay for others failures or bad luck

    Why would fast growers want to pool?

  • What I Like

    Incentive to promote business development

    The idea of levies and a safety net

  • What I Dont Like

    Beyond reasonable influence


    Casino shire districts

    Proportionate levy nonsensical formulation

    Proportionate levy unequal returns

  • What I Dont Like

    Damping being increased, not phased-out

    Safety net based on grant not budgets

    Authorities bearing VOA error losses

    No incentive to tackle bad debts

    Huge transfer of risk

  • What I Dont Like

    Potential waste / poaching

    Enterprise zone effects

    Different treatment of fire services

  • Worries

    Delegations of services with little or no cash

    Cash flow / other timing issues

    Ministers will want to tinker

    Perfect storm

  • What Happens Next?

    Further semi-secret discussions

    Bill passing through House

    Further consultation over summer

    Full scheme details in late-autumn

    April 2013 start

  • Neil Benn07869 37 35

    Business Rates:The Latest Developments



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