Business Rates Retention

&

Localising Support for Council Tax

John Magness : Director of Finance

Business Rates Retention

The new funding system

• Part (A) is RSG (still a complex formula)

• Part (B) is retained rates income

• The total (A+B) is scaled down to national control totals in the national budget and it drives savings targets at the local level

Business Rates Retention

Total shares

%

Local Shares

%Central share

50

Local share:Lewes DC 40 80County 9 18Fire 1 2Total 100 100

National Local 2013/14% % £m

Shares of retained Business Rates:HM Treasury (central share) 50 11.623LDC share of the retained business rates (local share) 40 80 9.298ESCC share of the retained business rates (local share) 9 18 2.092Fire share of the retained business rates (local share) 1 2 0.232Total retained business rates 100 100 23.245

The 2013/2014 Estimate of retained rate incomeInitial estimate of retained rate income

Targets, Tariffs, Levies, Top Ups Safety Nets & Pooling

• Target Business rates income £9.50m A

• Baseline Funding £2.06m B

• Tariff = A-B £7.44m

Levies are payable by Billing AuthoritiesThe Counties receive a top up

The levy calculation

1 - Baseline funding £2.06m

Target rates income £9.5m

= 78% of everything collected above £9.5m

Levies are paid to the Government

Lewes DC collects above target

Let us say a new assessment raises £1m

50% goes as the Central Share (£500,000)

9% goes to the County (£90,000)

1% goes to the Fire Authority (£10,000)

40% less a 78% levy is kept by Lewes District Council

i.e. £400,000 less £312,000 = £88,000 (8.8%)

On the additional £1m collected 18.8% is kept locally and 81.2% is retained nationally

Target

Safety net kicks in at 10% loss on the baseline funding target

For every £1 real terms growth above the target, LDC keeps 8 pence, gives 10 pence to other major preceptors and 82 pence to HM Treasury.

For every £1 below the target lose or gain £1 of your resources until a safety net kicks in when you have lost 10% of your target or you reach the target and the levy starts

Lots of successful appeals coming your way? Start the new system well below target if your RV history has been one of growth but you are hit with several of them.

The target reflects rateable value history over the last 5 years relative to all councils. Does this help or hinder?

Snakes and ladders

Anything under the radar since 31 March 2012? Start above target if your overall RV and amount to be collected are likely to exceed target.

Start here

% of target

Localising Support for Council Tax

Taxbase Implications for preceptors

Unknowns:

• New discount and exemption freedoms• Shape of local support scheme• How the 10% funding cut affects Towns and

Parishes• Impact on collection rate

Knowns:• Taxbase calculation starts 30 November• Taxbase must be ready by 31 January

Discounts and exemptionsDiscount/Exemption £ Tax

Base

Second Homes Discount - reduced to 0% 80,910 49

Class A - exemption reduced to 6 months

(Uninhabitable or under repair)

31,618 10

Class C - exemption reduced to 42 days

(empty properties up to six months))

336,834 205

Class L - exemption reduced to 0%

(Mortgagee in Possession)

12,245 7

Total 461,607 271

Council Tax Benefit

£mOld scheme:• Paid out in 2011/2012 8.078• Grant received (8.078)

New scheme:• Paid out in discounts 8.078• Grant received 0.000

Convert payments into discounts

£8.078m

Average band D tax £1,644.88

= 4,911 band D discounts

Note: detailed calculations by parish produce 4,893.64 Band D discounts

Taxbase changes

Band D• Existing band D 38,671.31

• Discounts & exemptions 271.00

• Council Tax Support Scheme (4,893.64)

• Estimated band D 34,048.67

Current Consultation

£ £District requirement 7,443,275 7,443,275Parish requirement 2,855,048 2,855,048Less new grant - District -834,000Less new grant - Parishes -320,000All district requirement 10,298,323 9,144,323

District 'Band D Tax p.a. £192.48 £194.11Parish Band D £73.83 £74.45All district total £266.30 £268.57

Current/new taxbase 38,671 34,049

Local Support for Council tax – New Scheme

• Partners – major preceptors + BA

• No cash involved, just discounts

• Converting discounts to the taxbase

• Cash limited reimbursement – new distribution

• Partners reap rewards and take all of the risk

Who does it affect?

• Pensioners

• Working Age

• Existing Claimants

• All Council Tax payers

• Precepting bodies

The Consultation Process

• Launched 13 August

• Scrutiny Committee 6 September

• Cabinet 1 October

• Consultation closes 29 October

• Cabinet 20 November

• Council 5 December

Local Scheme

• £20 per week maximum (saves £0.327m)

• Increase non dependant deductions (saves £0.152m)

• Reduce capital savings limit to £6,000(saves £0.047m)

• £5 per week minimum (saves £0.020m)

• Remove 2nd Adult Rebate (saves £0.008m)

Caseload Analysis

Working Age3,918 48.5%

£3.813m p.a. £4.265m p.a.

Pensioners 4,157 51.5%

Resources from April 2013

£4.265m 52.8%

Pensioners 4,157 51.5%

Working Age3,918 48.5%

£3.005m37.2%

£0.808m 10%

Nationaldeficit

reductionplan

The working poor will be disproportionately affected

Working Age AnalysisIn work and out of work

Working 1,700 43.4%

£1.4m

Income Support

1,322 33.7%

£1.423m

Job Seekers528 13.5%£0.582m

EmpSupport

368 9.4%£0.4m