Agenda item

[Report of the Chief Operating Officer. To be introduced by the Cabinet Member for Resources and Culture]The report seeks Cabinet’s approval for the adoption of a new discretionary business rates relief policy following an eleven week public consultation.

The Cabinet Member for Resources and Culture introduced the report which set out the new discretionary business rates relief policy and reflected significant changes to the policy, legal, and financial frameworks governing business rates that had taken place since the existing policy was implemented in 1990.

The Cabinet Member advised that, given the financial constraints the Council were facing, it would be increasingly reliant on local sources of income and in doing so would need to support local economic growth. The Cabinet Member also advised that the report supported Council priorities, particularly around jobs and regeneration. The Cabinet Member thanked all of the residents and traders who were involved in the consultation process.

The Leader asked Cabinet to approve the recommendations at section 3.1 of the report.

RESOLVED

To approve the new Discretionary Business Rates Relief Policy,

as appended to the report at Appendix A and described in more detail at

section 6 of the report. This

1.    Introduces new discretionary relief schemes for businesses:

i)              To support occupancy of new and converted office and work space across the borough (B1 class usage);

ii)            that are temporarily using a space whilst a new development project is being completed (meanwhile initiatives)

2.            Updates and makes the following changes to the existing

discretionary business rates relief scheme for Voluntary and Community Sector Organisations (VCOs):

i)      VCOs applying for discretionary relief will be asked to outline how their services bring social value and local impact to our residents. This information would be used as a basis for ongoing discussion over opportunities for the Council and VCOs to work closer together to bring benefits for residents and the local area

ii)    Reduces the current offer of 100% relief  to charity gift shops to 80%, but retains our offer of 100% relief to youth centres, counseling centres and voluntary aided schools

iii)   Shift from currently automatically offering 100% relief to all VCOs that are receiving funding from the Council (funding includes grants, contracts and discounted rent), to making a case by case assessment in the future. During the case by case assessment, the Council would assess (i) how the VCO intends to use the additional relief to directly support the activities that the Council is funding (ii) social value, and (iii) the financial case for offering the additional relief.   

iv)   Updates the existing categories of VCO that can claim 80% discretionary relief under the policy to also include:

a)    employment and skills support services

b)    organisations that promote health and wellbeing for local residents and a clean local environment

c)    organisations that work with groups of residents who are vulnerable or have additional needs e.g. working with those with special educational needs and disabilities, isolated individuals and children whose welfare is at risk

d)    children’s playgroups

Reasons for decision

Haringey’s discretionary business rates relief policy has not been updated since 1990.

There have been significant changes to the policy, legal and financial frameworks that govern business rates and these changes present an opportunity to consider how Haringey’s discretionary business rates relief policy can better:

1.    Support the Council’s strategic priorities – including the growth of key economic sectors, new job creation, supporting economic regeneration programmes, and support those organisations whose activities are bringing most social value to our residents.

2.    Support the Council’s Medium Term Financial Strategy.

Alternative options considered

To maintain the current policy. This option is not being considered because of changes to the local, national, legal and financial context outlined below:

Local

The Council’s Corporate Plan 2015-18 marks a shift to a more outcome focused approach to policy development and service delivery. It sets out five priorities for the Council to deliver against: 1) enable every child and young person to have the best start in life, 2) empower all adults to live healthy, long and fulfilling lives, 3) a clean and safe borough where people are proud to live, 4) drive growth and employment from which everyone can benefit, and 5) create homes and communities where people choose to live and are able to thrive. Under each priority the Corporate Plan lists objectives and outlines how it will measure success for each objective. 

In this new local context, there is an opportunity for a new discretionary business rates relief policy to better support our corporate priorities and objectives.

National

The new policy has been developed at a time when a wider agenda is emerging nationally on devolving power down from Central Government to local authorities over business rates.

On 5^th October 2015, the Chancellor announced that by the end of the Parliament, local authorities will be able to retain 100% of local business rates revenue. This was reiterated in the autumn statement in November 2015.

With significant cuts to Government funding for local authorities in the pipeline and the expected phasing out of Revenue Support Grant, the locally retained share of business rates will in the future become an increasingly important source of revenue for Haringey Council to use to fund local services for residents.

Having the power to decide locally how relief is given on business rates is a key part of the devolution agenda, particularly as relief can be used to support the medium to long term growth of business rates revenue.

Legal

The Localism Act 2011 has given local authorities scope to offer a broader discretionary business rates relief policy, including its extension to profit making organisations.

Financial

In April 2013, the Government introduced the business rates retention scheme, aiming to provide a financial incentive for local authorities to stimulate the local growth of business rates revenue. In London, local authorities now retain a ‘local share’ of 30% of the total business rates collected within their area.

In the context of a challenging national financial environment, revenue generated from business rates is set to become an increasingly important source of income for local authorities. A discretionary business rates relief policy, directed at incentivising the supply and value of rateable commercial property, has the potential over the medium term to help grow the Council’s revenue base from retained business rates.

Another option would have been to introduce a new discretionary relief scheme targeted at other economic sectors such as retail. This was not taken forward at this point in time because Haringey’s current Economic Growth Strategy is primarily aimed at growing new economic sectors in the borough such as tech, high value manufacturing and creative industries, all of which occupy office and work space (B1 Usage Class).  However, business rates levy and discount schemes targeted at strengthening High Streets could in the future be looked at as part of Business Improvement Districts, but these policy proposals still are only at an early stage of development and require the support of local businesses to implement. There are also a number of other business rates relief schemes already in place which other economic sectors, such as retail, can benefit from including small business rate relief, empty properties relief and transitionary relief.

A further option was to consider applying relief for existing office space. This was not taken forward because of financial reasons as it would not deliver the additional growth of business rates to mitigate the cost to the Council in applying the discount. However, there are other business rates relief schemes that remain in place that occupiers of existing office space can benefit from, including small business rates relief, empty properties relief and transitionary relief.