Agenda item

1.  That the commitment to greater devolution implicit in 100% business rates retention be welcomed, and that it be ensured that additional responsibilities are properly funded and are linked to local authorities’ role in driving sustainable economic growth.

2.  That the draft response to the consultation document ‘Self-Sufficient local government: 100% Business Rates Retention’ as set out in appendix 2 to the report of the Director of Finance and Business Improvement be agreed subject to the following amendments:

a.  That the first sentence of the draft response to Question 2 of the consultation be amended to read: ‘Expenditure from national agencies, where appropriate, should be channelled through local authorities, which are best placed to ensure that it is invested effectively to meet local needs.’

b.  That the draft response to Question 7 of the consultation be amended to read: ‘We are strongly in favour of rewarding sustainable growth.’

The Director of Finance and Business Improvement introduced the report and outlined the government’s announcement that local authorities would be allowed to retain 100% of business rates incomes by 2020. A consultation was being undertaken and the Council’s proposed response was presented to the Committee for agreement and attached at appendix 2 to the report.

It was clarified that:

·  Although local authorities currently kept 50% of business rates income, in reality only 7% of this was retained by Maidstone Borough Council.

·  Retention of 100% business rates would be on the basis of providing additional services and accepting greater responsibility.

Members considered the draft response to the consultation and raised the following points:

·  Demand led service areas were not appropriate for funding by a local authority as sustainability and continuity of service was of importance.

·  The draft response was congruent with the draft responses of neighbouring and similar sized district authorities.

·  If local authorities were able to vary the charge, businesses may put authorities under pressure to reduce business rates. Consultation with businesses would be required to ascertain potential consequences. However it was accepted that should the authority have the power to vary charges, it was under no obligation to use this power.

With specific reference to the draft response at appendix 2 to the report the following comments were made:

·  The response to Question 2 named national agencies whose expenditure should be channelled through local authorities. It was put forward that those organisations had extensive technical knowledge and utilised a wealth of data, and that a local authority would be unable to finance the same level of resources. It was put to the Committee that the sentence should omit reference to specific national agencies, and should read ‘expenditure from national agencies, where appropriate, should be channelled through local authorities.’

·  The response to Question 7 stated that the Council was strongly in favour of rewarding growth. It was put to the Committee that this should read ‘rewarding sustainable growth’.

The recommendations on the paper were moved and seconded.

An amendment was moved to include the proposed changes to Question 2 and Question 7 in the motion.

For – 12   Against – 0    Abstain – 3

The substantive motion including the proposed changes to Question 2 and 7 was voted on.

For – 14  Against – 0    Abstain - 1

RESOLVED:

1.  That the commitment to greater devolution implicit in 100% business rates retention be welcomed, and that it be ensured that additional responsibilities are properly funded and are linked to local authorities’ role in driving sustainable economic growth.

2.  That the draft response to the consultation document ‘Self-Sufficient local government: 100% Business Rates Retention’ as set out in appendix 2 to the report of the Director of Finance and Business Improvement be agreed subject to the following amendments:

a.  That the first sentence of the draft response to Question 2 of the consultation be amended to read: ‘Expenditure from national agencies, where appropriate, should be channelled through local authorities, which are best placed to ensure that it is invested effectively to meet local needs.’

b.  That the draft response to Question 7 of the consultation be amended to read: ‘We are strongly in favour of rewarding sustainable growth.’

For – 15  Against – 0    Abstain – 0