Agenda item
Calculation of Business Rates Income 2013/14
This report sets out the calculation of the estimated income from National Non Domestic Rates (NNDR), also known as Business Rates, to be used for 2013/14. This figure is used in the calculation of the council tax for 2013/14. Regulations require that the calculation is agreed by 31st January prior to the start of the financial year. This is a new requirement under the Local Government Finance Act 2012.
Minutes:
Mick Bowden (Deputy Director of Finance) presented a report to the committee setting out the calculation of the estimated income from National Non Domestic Rates (NNDR), also known as Business Rates, to be used for 2013/14. This figure would be used in the calculation of the council tax requirement for 2013/14 and was required to be agreed by 31 January 2013. This was a new requirement introduced by the Local Government Finance Act 2012. Prior to the introduction of this Act, business rates were passed to central government and redistributed from a national NNDR pool to local authorities according to a complicated formula for spending need. Under the Local Government Finance Act 2012 50% of business rates would be retained locally, and the remaining 50% would be redistributed by central government as before. In London, the Greater London Authority (GLA) would receive 20% of funds, leaving local authorities with 30% of the overall business rates collected within its boundaries.
Mick Bowden explained that the government had estimated the income from NNDR for the Council £30.623m. This equated to 30% of an overall NNDR figure for Brent of £102.078m. This overall figure had been calculated using the baseline position provided by the Department for Communities and Local Government (DCLG) which drew on figures for 2010/11 and 2011/12. As Brent had previously received significantly greater amounts than its contribution to the national NNDR pool it would receive a top-up payment of £46.534m, which would increase by RPI each year. It was emphasised that it was extremely difficult to accurately estimate this figure. Consequently, a further calculation would be required each year of the surplus or deficit on the NNDR part of the collection fund. The additional income from a surplus or the burden of a deficit against the estimated figure would be apportioned as the overall NNDR estimated income; 30% to Brent, 20% to the GLA and 50% to central government.
The committee raised several queries in the subsequent discussion. Further information was sought regarding the stability of the estimated income on a year by year basis and it was queried how Brent compared with its statistical neighbours. Members noted the impact of the issues raised in relation to the Valuation Office (VO) and queried whether their initial valuations were efficiently conducted. With reference to successful appeals against the VO, it was also queried how those that were backdated were reflected in the council’s accounts.
In response to members’ queries, Mick Bowden advised that the basic process of administering business rates had not changed and therefore, evidence could be drawn from past years returns. The greatest area of risk applied to the level of appeals against the VO’s valuations. The DCLG had recommended that a figure of 5% be used to account for the adjustments required by successful appeals, which would equate to a reduction in rate yield of £5.965m. The Council had lobbied the government on this matter with partial success. The 5% figure largely reflected the average impact of these appeals in Brent in previous years and it had therefore been used in the calculation of the estimated income but the potential for large liabilities springing from successful appeals remained. The number of successful appeals did prompt concerns regarding the accuracy of initial valuations; however, the council did have to rely on the information provided by the VO when calculating its estimate. Successful appeals that were back dated would be accounted for within the collection fund accounts..
RESOLVED:
(i) that the estimated income from NNDR (net rate yield) for 2013/14 be set at £106,307,048.
(ii) that it be noted that Brent would retain 30% of this figure, equalling £31,892,114, with 50% being paid to central government and the remaining 20% to the Greater London Authority.
Supporting documents:
- Calculation of NNDR Income 2013-14, item 7. PDF 170 KB
- Calculation of NNDR Income 2013-14 App 1, item 7. PDF 109 KB