Agenda item

Report of Deputy Chief Executive.

Cabinet lead member:  Councillor Gill Mattock

(1) Provisional council tax base of 33,923.7 for 2017/18 agreed.

(2) Indicative retained business rates income of for 2017/18 noted.

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

54.1 Cabinet considered the report of the deputy chief executive.  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.  The council tax base for Eastbourne was calculated by multiplying the ‘relevant amount’ by the ‘collection rate’.

54.2 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.  For 2017/18 this totalled 34,793.5 equivalent properties.  (The relevant amount had increased by 237 (0.68%) band D equivalent dwellings from 2016/17.  This reflected expected growth in the number of taxable properties of 80 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 244.)

54.3 The collection rate was the council's estimate of the proportion of the overall council tax collectable for 2017/18 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 97.25% should be adjusted upwards to 97.5% going forwards.  Taking the relevant amount of 34,793.5 and applying a collection rate of 97.5% produced a council tax base for 2017/18 of 33,923.7.

54.5 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 2017/18 financial year must be approved by 31 January 2017.  The report described how the net rate income for 2017/18 would be calculated. 

54.6 Currently the business rates were based on the valuation list produced in 2010; this list was now in the process of being updated and new valuations would be effective from 1 April 2017.  Along with the revaluation the process for making appeals had been changed; this was intended to stop speculative appeals and speed up the process.  Once all the facts had been checked as being correct, the ratepayer would have the responsibility to provide evidence as to why the rateable value should be changed.  It was unknown at this time how many appeals would be received.  The council still had a number of appeals outstanding from the current list, which would be carried forward until settled.  The provision for appeals would need to cover both existing and new appeals.

54.7 The actual ‘NNDR1’ form for 2017/18 had not yet been received and until all the unknown issues mentioned above were resolved it was not possible to model the amount of expected business rate income for 2017/18.  However on the assumption that income levels would be the same an indicative figure for net business rates yield of £35.6m could be expected. 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).

54.8 The amount of business rates income payable to the general fund was calculated by deducting tariff and levy payments from the amount of the local share of net business rate yield.  The system of tariff or top up payment was to redress the balance of business rate income nationally to ensure that no local authority was worse off as a result of it business rates at the outset of the rates retention scheme in 2013.  The levy rate allowed authorities to retain their growth in an equivalent proportion to its baseline revenue.  The levy had been set at 50% of the growth business rates income over the baseline allowance set by government.

54.9 The Department for Communities and Local Government was proposing, through adjustments to the tariff/top up, to counteract the changes to the rateable value and the multiplier, to make it revenue neutral for local authorities.  This authority currently made a tariff payment.  Given the uncertainty about the amount of business rate yield and the tariff payment it was not possible at this time to calculate the amount that would be credited to the general fund.  These figures would be confirmed once the final NNDR1 had been completed in January and the government grant settlement figures received later this month.

54.10 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 £2,120m (down £174,000 from the original NNDR1 figures supplied in January).  Eastbourne’s share of the pool was expected to be £180,000.

54.11 As at 31 March 2016 the collection fund showed deficit of £206,003 (£1,403,477 council tax surplus and £1,609,480 business rates deficit). £352,606 was being recovered across council tax and business rates preceptors during 2016/17, leaving a balance of £146,607 to be distributed in 2017/18.  The council had to estimate the overall surplus/deficit at 31 March 2017 and inform the precepting authorities in January 2017 of this estimate in order that the amount was included in the 2017/18 precept figures.  Current monitoring figures indicated a surplus by 31 March 2017 of £976,687 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. 

54.12 The calculation on the business rate income element of the collection fund currently indicated a deficit balance of £433,324 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.

54.13 Resolved (key decision): (1) That a provisional council tax base of 33,923.7 for 2017/18.

(2) To note the indicative retained business rates income of for 2017/18, as set out in the report.

(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.