Agenda item

[Report of the Chief Finance Officer. To be introduced by the  Cabinet Member for Economic Development , Social Inclusion and Sustainability.]

Following consultation on options to agree  new discretionary business rates relief  scheme targeted at businesses that have seen their bills increase following revaluation.

The Cabinet Member for Economic Development, Social Inclusion and Sustainability introduced the report which set out the Council’s allocation of Government’s funding for discretionary business rate relief and sought agreement on the criteria for allocating this additional business rate relief to local businesses.

RESOLVED

To approve the Discretionary Business Rates Relief – Revaluation Support Policy, as appended to this report at Appendix B and described in more detail at section 6 of the attached report, which:

Ø    Allocates discretionary business rates relief to rate payers where -

The business rate increase is £500 or more (after all other applicable reliefs have been applied)

Ø    Automatically applies a 42% discount on the monetary increase in business rates to affected businesses in 2017/18

With the following exclusions:

a)    Premises occupied by multinational and national chain

companies

b)    Excepted hereditaments within the meaning of s 47 Local Government Finance Act 1988 and wider public sector premises

c)    Businesses not located in the borough for the duration of 2016/17 and/or have left since April 2017

d)    Premises with rateable values in excess of £200,000

Reasons for decision

This policy proposal sits in the context of the Council’s wider economic

growth priorities for the borough. We believe the recommended policy best supports economic growth as it targets small, medium-sized and independent businesses over multinational, and national chain businesses. The policy proposal aligns with the Council’s existing policies to encourage business resilience and growth in Haringey and support local job creation. For this reason, the policy proposal supports private businesses over public sector premises (a number of which are hereditaments already excluded in accordance with s 47 Local Government Finance Act 1988).

Haringey Council will be expected to use discretionary business rates relief

to distribute the Government’s extra funding for ‘revaluation support’ to those businesses that have seen increases in their bills. The rationale behind the proposal and options consulted on are detailed in section 6 of this report; and principles below:

·         Target relief at businesses that are facing an increase in their business

rate bills following the revaluation, encompassing different sizes, sectors and locations across the borough

·         Distribute the extra relief in a way that is proportionate to how much a businesses’ bill has increased, and in a fair and equal manner

·         Apply to ratepayers occupying lower value properties

·         Ensure that the extra relief is distributed to local businesses quickly and smoothly

·         Be relatively simple for the Council to administer

Reason for decisions

We are also seeking to ensure that relief for businesses is distributed as

quickly as possible and minimises administrative costs where possible. We believe this is fundamental, both to the Government’s intentions of the scheme and to our priorities to support businesses that have seen large increases in their business rates since the 2017 revaluation.

Alternative options considered

To apply the relief in a similar way to that recommended (in section 6) but to

also include (rather than exclude) multinational and national chain businesses in the scheme. In expanding the number of eligible businesses the percentage discount relief allocated to the monetary business rate increase would fall. This equates to allocating a 25% discount on the monetary increase, costing £1.27 million in 2017/18. Note the recommended option enables a 42% reduction.

The consultation supported the proposal that excluding multinational and national chain businesses is a fairer way of distributing the relief to businesses that are less able to cope with the business rate increase. A majority of the respondents to the Council’s consultation stated that preference should be given to small, medium-sized and independent businesses; and Haringey’s presenting Authority, the Greater London Authority, stated that firms operating nationally or internationally may be benefitting from reductions in business rates in other parts of the country.^[1]

To apply the relief as per the recommendation in section 6 but to include the wider public sector.We are minded not to extend the fund to wider public sector organisations. We believe this is in line with the aims of the fund, which are to support business and promote growth. Therefore, we believe it is best to support those small, medium-sized and independent businesses in Haringey facing difficulties.

To apply the relief as per the recommendation in section 6 but to include businesses not in the borough for duration of 2017/18 or have since left. It is considered that their inclusion with limited funds would not be prioritised; and would involve a disproportionate administrative burden to calculate a pro rata relief. Businesses that have occupied premises in Haringey for the full financial year are to be prioritised. Also, there are other reliefs that may be available to new businesses in the borough.

To apply the relief as per the recommendation in section 6 but to include premises with rateable values in excess of £200,000. We are minded not to provide the relief in this way. This in line with the DCLG consultation (March 2017) point where it states, “further assume, by and large, more support will be provided to”:

·         Ratepayers or localities that face the most significant increase in bills

·         Ratepayers occupying lower value properties (i.e. properties with a rateable value below £200,000)

To apply the relief as per the recommendation in section 6 but to include businesses with increases below £500. We are minded not to apply the relief in this way. We consider the £500 threshold follows the spirit of the discretionary relief scheme by supporting those businesses hardest hit by rates increases. This rationale is also informed by the large administrative cost if there was not a threshold; set against the comparatively low level of relief to businesses.

The following options were considered and discounted at the Cabinet member signing meeting on 4^th April 2017 and therefore not consulted on:

Haringey Council could use its own funds to ‘top-up’ the Government’s allocated funding for implementing this extra discretionary relief. This option has been discounted because it would result in a financial cost for the Council at a time when the organisation needs to find financial savings as part of its medium term financial strategy.

To target all of the Government’s funding for discretionary relief at one particular high street, regeneration zone or economic sector. This option has been discounted because the 2017 revaluation will have significant impacts on all high streets and localities across the borough, and impact upon retail, workspace and industrial sectors. To concentrate all the Government’s funding on just one locality or sector within the borough would be unfair.

To target all of the Government’s funding for discretionary relief through a large scale ‘hardship fund’ which businesses would apply for. This option has been discounted because of the significant administrative challenges for assessing thousands of applications on a case by case basis. It would not be practical, could lead to lengthy delays in awarding relief and treat businesses inconsistently.