Agenda item

Report of Chief Finance Officer.

Cabinet lead member:  Councillor Gill Mattock

(1) Provisional council tax base of 33,606.10 agreed for 2016/17.

(2) Provisional retained business rates income amount of £3.947m for 2016/17 agreed.

(3) Chief finance officer, in consultation with the lead cabinet member for finance, authorised to determine the final amounts for the council tax base and retained business rates income for 2016/17.

45.1 Cabinet considered the report of the chief finance officer.  The council was required to set its council tax base and the expected business rate income for the forthcoming year.  These calculations were used as the basis for the amount of income the council will precept from the collection fund.

45.2 The council tax base for Eastbourne was calculated by multiplying the ‘relevant amount’ by the ‘collection rate’.  The relevant amount was the estimated full year equivalent number of chargeable dwellings within the borough.  This was expressed as the equivalent number of ‘band D’ dwellings with 2 or more liable adults.  The relevant amount had increased by 1,248 (3.75%) band D equivalent dwellings from 2015/16.  This reflected expected growth in the number of taxable properties of 102 plus the effect of the changes to the council’s local council tax reduction scheme (LCTRS).  The effect of these changes had resulted in an increase to the total number of chargeable dwellings of 1,615.

45.3 The collection rate was the council's estimate of the proportion of the overall council tax collectable for 2016/17 that would ultimately be collected.  This was expressed as a percentage.  The current level of council tax collection and the forecast of a surplus balance on the collection fund indicated that the current collection rate of 97.75% would be adequate, however, after taking into account the impact of the LCTRS and other factors it was considered that the collection rate should be decreased to 97.25% for 2016/17.  Taking the relevant amount of 34,556.4 and applying a collection rate of 97.25% produced a council tax base for 2016/17 of 33,606.1.

45.4 The Local Government Finance Act 2012 had introduced a new system for the local retention of business rates. This meant that the council was required to formally approve the expected business rate income for the forthcoming year. The estimate for the 2016/17 financial year must be approved by 31 January 2015.  The report described how the net rate income for 2015/16 would be calculated.  The actual ‘NNDR1’ form for 2016/17 had not yet been received but the provisional figures based on the 2015/16 form plus known changes had been calculated and indicated a net yield of £34,690,000.  The allocation would be in the proportion of:

• 50% to central government.
• 40% to the local billing authority (this council).
• 10% to the other precepting authorities (9% to the county and 1% to the fire authority).

45.5 As some local authorities collected more business rates than they currently received in formula grant (which was based on relative need and resources), whilst others were lower, the government would rebalance to ensure that no local authority was worse off as a result of its’ business rates at the outset of the scheme though a system of tariffs and top ups.  Tariff and top ups would be self funding and fixed in real terms (i.e. only up rated by RPI in future years) ensuring that changes in retained income were driven by business rate growth.  This authority had a business rate baseline higher than its baseline funding level and thus was due to make a tariff payment.

44.6 The final amount of retained business rates to be credited to the general fund is calculated as follows:

These figures would be confirmed once the final NNDR1 has been completed in January and the government grant settlement figures received later this month.

45.7 The council worked within a business rate pool with the other East Sussex borough and district councils, East Sussex County Council and East Sussex Fire Authority.  Under pooling, the levy as set out above would be payable to the pool rather than to the government, and redistributed to participating authorities in accordance with the agreed memorandum of understanding.  This money would be used to fund economic development.  The first half year monitoring of the pool showed that overall the forecast levy payments across all authorities was £1.321m (down £938,000 from the original NNDR1 figures supplied in January).  This reduction was due to all billing authorities except Wealden forecasting lower net rates payable than predicted, the significant impact on forecast appeals provisions arising from appeals by GP surgeries affected by a valuation tribunal decision and the large number of appeals lodged at the end of March 2015.  Eastbourne’s share of the pool was expected to be £49,000 (as against the £236,000 forecast in January).

45.8 As at 31 March 2015 the collection fund showed deficit of £1,342,171 (£447,357 council tax surplus and £1,789,529 business rates). £1,115,817 was being recovered across council tax and business rates preceptors during 2015/16, leaving a balance of £226,354 to be distributed in 2016/17.  The council had to estimate the overall surplus/deficit at 31 March 2016 and inform the precepting authorities in January 2016 of this estimate in order that the amount was included in the 2016/17 precept figures.  Current monitoring figures indicated a surplus by 31 March 2016 of £662,553 for council tax; this would be revised in January and the results reported to members as part of the budget report to the February cabinet. 

45.9 The calculation on the business rate income element of the collection fund currently indicated a deficit balance of £1,711,700 as a result of a bigger than anticipated provision for outstanding appeals.  The calculation would be revised for January and the results reported to members as part of the budget report to the February cabinet.

45.10 Resolved (key decision): (1) That a provisional council tax base of 33,606.10 be agreed for 2016/17.

(2) That a provisional retained business rates income amount of £3.947m for 2016/17 be agreed.

(3) That the chief finance officer, in consultation with the lead cabinet member for finance, be authorised to determine the final amounts for the council tax base and retained business rates income for 2016/17.