Transcript Financing Growth in Local Authorities Alison Scott Assistant Director, Policy and Technical CIPFA www.cipfa.org cipfa.org.uk Business Rates Retention.

Financing Growth in
Local Authorities
Alison Scott
Assistant Director, Policy and Technical
CIPFA
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Business Rates Retention
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Non-Domestic Rates - current
Billing Authority
General Fund
Central
Government
Ratepayers
Collection Fund
Preceptors
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Non-Domestic Rates - current
Billing Authority
General Fund
Central
Government
Ratepayers
Collection Fund
Preceptors
www.cipfa.org
cipfa.org.uk
Non-Domestic Rates - Proposed
Billing Authority
General Fund
Central
Government
Ratepayers
Collection Fund
Preceptors
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Non-Domestic Rates - Proposed
Billing Authority
General Fund
Central
Government
Ratepayers
Collection Fund
Preceptors
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Overview – Separate Fire Authority
Rates Distribution
Preceptor
Fire
Central
Billing
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Baselines, top-ups and tariffs
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Non-Domestic Rates baseline
 Average of contribution to pool over five years
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Compared to the spending baseline
 Top-up or tariff determined
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Set out in LGF Report
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Safety Nets and Levies
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Safety net payable if resources fall below 90% or
92.5% of baseline
 Threshold currently being consulted on
 Payable “on account” at start of the year
Levy net on “excessive growth”
 Individual rate for each authority so that 1%
growth in business rate = 1% growth in retained
resources
 Cash paid in the following financial year
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Budget Setting
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Set at the beginning of the year
Payments will not vary
 Changes in collection will come through as deficit
or surplus on the Collection Fund
As a result will require formal approval process
similar to Council Tax Base
Levies and safety net adjustment made in following
year, cash comes through in surplus/deficit in
collection fund.
Accounting different and complicated.
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Put it all together...
Billing Authority
General Fund
Central
Government
Ratepayers
Collection Fund
Preceptors
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TIF, New Homes Bonus,
Community Infrastructure Levy
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Tax Increment Financing
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Mechanism through which Councils borrow against predicted
growth in their locally raised business rates and use that
borrowing to fund key infrastructure and other capital
projects.
Been used in the USA for decades
However…
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For long term viability TIF works best in a growing national
economy
Levy payments and short reset periods may restrict the
usefulness of TIF arrangements
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New Homes Bonus
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Top sliced level of grant support to encourage the
building of homes
NHB will be funded within the Spending Review
control totals
Those who build above the national average will see
funding increased and those who build below will see
funding reduced
The funding is not ring fenced and can be used for
either revenue or capital purposes.
It includes an affordable Housing premium (£350 per
unit in 2012-13) to encourage this type of Build
http://www.communities.gov.uk/housing/housingsupply/
newhomesbonus/newhomesbonusquestions/
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Community Infrastructure Levy
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New levy that local authorities in England and Wales
can choose to charge on new developments in their
area.
The money can be used to support development by
funding infrastructure - for example new or safer road
schemes, park improvements or a new health centre.
It applies to most new buildings and charges are
based on the size and type of the new development.
The Community Infrastructure Levy (Amendment)
Regulations 2011 came into force on 6 April 2011.
The levy is normally collected for the charging
authority by the authority that grants planning
permission
 district and metropolitan councils; unitary
authorities;
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Community Infrastructure Levy
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Charging schedule.
Supported by evidence, such as the economic viability
of new development and the area’s infrastructure
needs.
One standard rate or specific rates for different areas
and types of development.
Differential rate must be justified by the economic
viability of new development.
Charging authorities must consult.
The charging schedule must also undergo a public
examination by an independent person before the
charging authority can formally approve it
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Community Infrastructure Levy
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Planning obligations will continue
For example, new affordable housing will continue to
be delivered through planning obligations rather than
the levy.
Reforms have been introduced to restrict the use of
planning
obligations. Some of these have already come into
effect and others will take effect from April 2014 – or
as soon as a charging authority starts to charge the
levy.
After April 2014, planning obligations can no longer be
used as the basis for a tariff to fund infrastructure.
Any Questions?