Crawley Borough Council has been part of a West Sussex-wide Business Rates Retention 75% Business Rates Pilot. Prior to this there was a business rates pool of which Crawley was not a member because strategically the pool would be better off without it due to the way that business rates is accounted for as Crawley pays a levy.
A technical consultation was released on 3rd October 2019 by the Ministry of Housing, Communities and Local Government (MHCLG) which confirmed that pilots would finish at the end of the financial year.
The MHCLG invited authorities to indicate preferred pooling arrangements for the forthcoming year, 2020-21; the closing date for response was Friday 25th October.
The invitation confirmed the 75% pilot arrangements for 2019-20 will finish at the end of March 2020, however the current county-wide pool designation will continue unless MHCLG receive specific instruction to revoke it.
Given pooling arrangements for 2020-21 will revert back to the 50% rates retention model, it is not considered financially viable to continue as a county-wide pool. It is therefore proposed that the 2019-20 county-wide pilot arrangement is revoked and a new pool proposal is submitted for 2020-21.
Modelling indicates the optimum pool for 2020-21 would consist of Adur, Arun, Horsham and West Sussex. Based upon current projections this could result in a net retained levy of £3.7m.
Chichester, Mid Sussex and Worthing have not been considered for the 2020-21 pool arrangement due to their exposure to NHS appeals. Including these authorities, the net retained levy could be at risk to safety net payments.
A joint application from all West Sussex authorities has been submitted with these members.
The governance and decision making includes.
· WSCC will continue to administer the pool. Reasonable costs to be met from the pool.
· No authority will be worse off for taking part in the pool. First call on any gain will be to put the authorities back to a no worse position than if they were a standalone authority with their usual safety net.
· A small sum will be topsliced from the pool gains for LEP and economic partnership subscriptions.
· Any remaining gains will be placed in a Strategic Investment Fund.
· The £2m contingency currently held in the 2019-20 75% pilot arrangement will be rolled into 2020-21 pool arrangement.
· Any residual balance from the 2019-20 75% Pilot arrangement, currently around £1.9m, will also be rolled forward into the 2020-21 arrangement.
All decisions or issues requiring the agreement of the Members shall be made by a meeting of the Pool Board. The Board will consist of the Leader of West Sussex County Council and also the Leader of each of the West Sussex District and Borough Councils.
The Pool Board will be advised by the County Chief Executive Group, comprising the Chief Executive of each authority, or their delegated nominee. Recommendations on use of the Strategic Investment Fund and any other Pool Governance matter will be submitted to the Board after consideration by the County Chief Executive Group.
The Pool Board decisions on the application of the Strategic Investment Fund will be made on the basis of a simple majority vote. However, agreement by all authorities would be required to change the terms of the governance arrangements.
All decisions on the allocation of funds from the Strategic Investment Fund will be made after considering a report from the appropriate S151 officer to ensure proper financial consideration of all disbursements.
Karen Hayes (Head of Corporate Finance)