local government resource review budget finance overview scrutiny committee 13 th september 2011 n.
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Local Government Resource Review Budget & Finance Overview & Scrutiny Committee 13 th September 2011. Initial consultation paper issued on 18 July Incentive to promote local growth Reduce dependency on central govt Maintain degree of distribution of resources Protection for businesses

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Presentation Transcript
background

Initial consultation paper issued on 18 July

  • Incentive to promote local growth
  • Reduce dependency on central govt
  • Maintain degree of distribution of resources
  • Protection for businesses
  • Eight technical papers to follow…….
Background
scheme outline

Local authorities retain share of business rate growth as a replacement for current formula grant system.

Either Keep existing rates plus a top-up

Or Keep existing rates less a tariff

Scheme outline
scheme outline1

Indicative Brent figures (based on 2011/12):

Formula Grant £165.9m

Business Rates £ 97.5m

Top-up amount £ 68.4m

Scheme outline
technical papers

Issued on 19 August and include:

  • Establishing the baseline
  • Tariffs and top ups
  • Levies and safety nets
  • Revaluation and transition
  • Resetting the system
  • Renewable energy
  • Pooling
TECHNICAL PAPERS
establishing the baseline

National Baseline

  • Keep within SR2010 figures (business rates more than formula grant in 2014/15)
  • An estimate will be made of national business rate levels for 2013-14 and 2014-15 - authorities will only benefit to the extent that business rates exceed those forecasts
  • Amounts above SR2010 levels will be "set aside"
Establishing the baseline
establishing the baseline1

Authority Baseline

  • Update existing formula grant settlement
  • Either - base on average national increase
  • Or - update the formula (eg population data)
Establishing the baseline
establishing the baseline2

Authority Baseline

  • How to estimate individual authorities business rates?
  • Either - a "snapshot" assessment
  • Or - average over 2 or 3 years
Establishing the baseline
tariffs and top ups

Either  - Fixed in cash terms

  • Better for tariff authorities
  • Or - Increased by inflation
  • Better for top-up authorities
Tariffs and top-ups
levy and safety net

Levy - used to recover "disproportionate growth“

  • Principally used to fund a “safety net” to deal with downturns in rates for individual authorities
  • No specific amounts proposed for what the levy might be (eg x pence in the pound)
  • Safety net could relate to annual reductions in income or reduction from starting point
Levy and safety net
revaluation and transition

No change to the current arrangements for revaluation of rateable values every five years

  • Transitional protection for business ratepayers to phase in revaluations would remain
  • The system would be adjusted to take account of the redistribution of business rates income between authorities
Revaluation AND TRANSITION
resetting the system

Option to reset the system:

  • Enables reallocation if resources no longer reflected changing service pressures for individual authorities
  • Balance to be struck with ensuring scheme provides incentives for growth and stability
RESETTING THE SYSTEM
renewable energy

Business rates collected from renewable energy projects will be retained in full by the relevant local authorities

  • Applies to projects after 1 April 2013
Renewable energy
renewable energy1

Business rates collected from renewable energy projects will be retained in full by the relevant local authorities

  • Applies to projects after 1 April 2013
Renewable energy
pooling

Local authorities could choose to form voluntary pools

  • Would share benefit of growth and smooth impact of volatility over a wider area
  • A London wide scheme would change Brent’s position within the scheme
pooling