Devon County Council has persuaded West Devon and other district councils to take part in a pilot scheme called the Devon Business Rate Pool which amounts to a bit of a gamble on economic growth in the county.
The councils are swapping some of their support from the Treasury in exchange for the right to take a bigger share of local business rates to the same value. They cannot actually put up the business rates, which are calculated according to a national formula, but they can encourage them up, by being friendly to business expansion and start-ups. And if they succeed, they can keep the extra income.
It’s an interesting idea but a complicated one. Business rate assessments are often mired in appeals, so payments can be delayed. There is also the risk that they might go down, not up.
Also, it gives the authorities another incentive to ignore objections to new development, particularly more roads.
However, there are government incentives to take part in the trial and West Devon Council and other smaller authorities have worked out that their shares should be better than they are getting at the moment. West Devon’s financial officers reckon it should mean another half-million over the 2018-19 financial year.
Devon Council would get even more and there would be a small percentage for the fire authority, so up to now it looks like bonuses all round in return for taking part in the experiment.
West Devon council leader Philip Saunders, of Yelverton, said this week: “A significant amount of partnership working between Devon’s authorities has taken place to understand the implications of the pilot. It is hoped that sharing the proceeds of business rates growth income will encourage all the authorities to further their growth agendas, promoting greater consistency and shared knowledge.”
Other county-level councils taking part in the trial period are Berkshire, Derbyshire, Gloucestershire, Kent & Medway, Leeds, Lincolnshire, Solent, Suffolk and Surrey.
The extra money from the trial comes nowhere near closing the local government funding gap and Devon Council is likely to want nigh on six percent more off householders over the next year.
The way for this amount has been cleared, as explained in The Moorlander as follows …
“Local authorities are to be allowed to raise council tax by up to 5.99 percent next year, after a further relaxation of the government-imposed cap, to address shortfalls in funding for social care.
“In his provisional local government funding settlement for 2018/19, Communities Secretary Sajid Javid announced that the threshold for triggering an automatic local referendum was being increased from 2% to 3% of core council tax. Coupled with the 3% additional precept permitted to authorities with social care responsibilities, this gives councils freedom to hike bills by up to 5.99% next April without seeking voters’ approval. “
There is pressure on councils to spend even more on social services and ask for the public to support them but Devon ‘s Conservative majority is unlikely to go that way.
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