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A forecast increase in business rates income next year will mean little extra cash for councils, it has emerged.

Earlier this week local government minister Marcus Jones trumpeted a £386m increase in the rates due to be paid by businesses in 2016-17. He claimed the rise was due to a 900,000 increase in the number of businesses.

However, figures published by the Department for Communities & Local Government show that £284m of the extra cash available was due to the end of ‘retail relief’, which councils could grant to retail businesses with low rateable values.

As councils were compensated for this discount by the government under section 31 grants, and will only keep 50% of rates income, the actual additional cash available to local government is minimal.

Neil Benn, director of Pixel Financial Management, told LGC it was “obvious” when looking at the figures that the end of retail relief was behind the change.

He said: “More rates will be paid but it’s offset for councils by lower DCLG compensation grant so Her Majesty’s Government is the only gainer.”

Once the £284m is stripped out the increase is 0.4%, rather than the 1.7% claimed by the DCLG earlier in the week. This is less than the annual inflationary increase in the business rates multiplier which has been set at 0.8% for 2016-17.

Alan Gay, deputy chief executive at Leeds City Council, told LGC the combined impact of the increase in the multiplier and the ending of retail relief meant income should have increased by around £500m.

“To me it suggests there is actually a decline in business rates,” he said.

Mr Gay also suggested there was often an “element of optimism” in the forecasts submitted to DCLG at the beginning of the year on which the figures are based.

“I would be surprised if there is not a similar shortfall to that we have seen in previous years,” he added.

As LGC reported in November, there was a £750m shortfall in the amount of business rates collected in 2014-15 compared to forecasts for the year, a discrepancy blamed on losses to appeals.

That year the actual net business rates income, once deductions had been made for discounts and appeal losses, was £21.6bn compared to a forecast of £22.4bn. The total net income in 2016-17 is forecast to be £23.5bn.

In a statement the DCLG maintained their position.

A spokeswoman said: “It is beyond dispute that there are now 900,000 more businesses than in 2010 and the latest figures show that, after stripping out changes in reliefs, multiplier and appeals provisions, the increase in the number of businesses has contributed to real growth in rate income between 2015-16 and 2016-17.”

I’m beginning to like the cut of this government Minster’s jib, when it comes to how local government should be preparing for the future.  His suggestion that councils should share the resources used to produce their internet presence makes total sense, but should not be limited to just websites.

All councils do a range of activities and deliver a range of services that are virtually identical.  No matter how many times you hear councils claim to be different, or even unique – which is of course is true geographically – people are people and what they require from their local council, tends to be very much the same.  So why do the four hundred plus councils across the UK continue to insist on purchasing something as expensive as software, using an individual, or in some cases, bespoke approach?

Historically, councils didn’t tend to need to talk to each other and were very inward looking and protective of their way of doing things.  Part of this was of course was an element of self-preservation.  As we have now seen in many councils in recent years, sharing resources, including staff, leads to efficiencies, which in turn leads to a need for fewer specialist staff.

The one place local government seems to be slow to make progress, is when it comes to sharing software systems.  I’ve little doubt that this will be due, in part, to the software companies making life difficult when it comes to a genuine shared procurement arrangement between councils.  However, it’s also likely that both central and local government play a significant part in not seeking combined software solutions, when a new duty, or service is introduced, because they think there’s bound to be a need to do something different in their area from every other council in the country.

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Minister proposes ‘open source’ solution for council websites
23 October, 2015 | By Sarah Calkin

Local authorities should not be spending money developing their own individual web portals when a single system could be developed and shared across councils, a government minister has said.

Speaking at a conference on public service reform on Wednesday, cabinet office minister Matt Hancock praised the Government Digital Service and its approach of developing platforms which could be shared across government for free.

The service developed the gov.uk platform now used for all Whitehall department websites.

Mr Hancock said GDS was now developing “core digital infrastructure for common activities like making and receiving payments, or tracking the status of an application” which would allow the public to deal with government “through one simple interface”.

Asked whether councils would be able to use the product he said: “The product should be available to local government… We are looking at what we can do to ensure that specific requirements of local government, as opposed to the source code more broadly, are available, that’s part of the spending review.”

Many local authorities are currently developing their own individual web portals, working with companies such as Agilisys and Civica, allowing residents to access services on line and conduct secure transactions, such as paying council tax.

Asked by LGC whether they should wait for an ‘off the shelf’ government product, Mr Hancock said he would “hate to see every council spending the development money to develop their own portal”.

“One portal written in open source software could be used by lots and lots of different councils and joined up that way,” he said.

Trevor Holden, chief executive of Luton BC, advocated a centralised approach at a recent Society of Local Authority Chief Executives & Senior Managers event.

He told LGC he welcomed the minister’s comments and called for a single piece of research and development work to develop the software, coordinated by central government or the Local Government Association.

“The vision has to be buy it once and buy well,” he said. “There should be a single portal it should be local and central government in the first instance but with an aspiration for the whole public sector so [for example] it knows who your GP is as well and you could book appointments through the system.”

Matt Hancock has captured very nicely the quandary so many councils, councillors and of course officers find themselves in when proposing new projects, or trying to do things differently – fear of failure and the subsequent criticism from local taxpayers for wasting ‘their’ money.

Neither he nor I would suggest that local government should be cavalier in the way it uses public money.  However, if we are going to do things differently, as we are constantly being entreated to do, we have got to take a certain level of risk in order to be successful in our endeavours.  If something that was being proposed was a racing certainty, we probably would have been doing it years ago, or certainly would have given it serious consideration, even if it had not been pursued, because of the level of upfront investment required.

However, we are now in a world where it’s literally sink or swim when it comes to not just surviving as ‘the council’, but actually growing and continuing to be relevant and important to the area we represent and care about.  

So, will we see another project like the Red Lion Quarter in Spalding being pilloried by all and sundry, simply because one minor element of it didn’t work?  Very probably, it seems to be the nature of the beast when it comes to the activities of government and the spending of the taxpayers’ cash.  The supermarkets and in particular Tesco, can get their business model seriously wrong, spending millions of pounds on the wrong approach, or the wrong projects and bounce back, reputation intact a few years later.  However, if the local council makes a mistake and a project doesn’t deliver as expected, certain elements of the public and local business organisations, will continue to drag it up at any opportunity, until their dying day.  

On the positive side, given the plans this government has for local government – a self sustaining, non-public money funded service provider – we should be free to rise from the ashes, reputation untarnished as needed, just like Tesco’s will, should anything go askew in that brave new world.  Of course there’s always the fate of the likes of Woolworths, Comet, Whittards, MFI, HMV, etc, etc, to consider……and then there’s always Detroit.

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Cast aside caution on transformation, minister urges22 October, 2015 | By Sarah Calkin

Local government has been too risk adverse and should be prepared to confront failure as it reforms services, a Cabinet Office minister has said.
During a speech on public service reform in central London yesterday, Matt Hancock also said greater control over business rates would allow councils to reform services to make savings.

Mr Hancock said: “The first question for government shouldn’t be what’s the best model for delivering public services, but rather what is the user need?

“Getting this right inevitably involves trial and error… In public services we are too cautious about using that phrase.”

Speaking to LGC after the speech, Mr Hancock acknowledged local government faced further funding constraint this parliament but insisted ministers were offering the sector freedom to reform and improve services.

“Reform both in terms of giving more freedom to operate according to how people on the ground see fit, policy freedom and the big business rate freedom that was announced,” Mr Hancock said. “These freedoms are given with the knowledge that people can use them to meet very tight spending limits.”

Asked how genuine this freedom was, Mr Hancock highlighted the general power of competence introduced by the previous government under the Localism Act 2011. This allows councils to do anything an individual can do, provided it is not prohibited by another law.

Mr Hancock said local authorities were free to try new things as long as they complied with relevant legislation, for example the Data Protection Act or rules governing social care.

He added: “I believe in the power of human ingenuity which includes the ability of people working on the frontline to constantly improve the services they deliver.”

Warning against accepting tobacco firms’ help to clean streets

The Sunday Telegraph reports that local authorities have warned against accepting help from tobacco companies to clean up the streets. An estimated 122 tons of daily UK street litter is from cigarette butts, cigarette packets and used matches. 

In January, Kris Hopkins, then a local government minister, said he wanted tobacco companies to “make a contribution to put right the wrongs as a consequence of their product”. The companies offered to fund measures to help clean the country’s streets last month, but the offer was rejected by Rory Stewart, a junior environment minister. 

In a letter to the Tobacco Manufacturers’ Association, Mr Stewart said that a tie-up risked undermining councils’ work in promoting public health. Mr Stewart said it was “for local authorities to decide whether they wish to work with the tobacco industry”, but added that councils should take their own legal advice before accepting the support. He said: “Since April 1 2013, local authorities have had responsibility for improving the health of their local populations and for public health services. The Government’s view is that where a local authority enters into a partnership with a tobacco company, this fundamentally undermines the authority’s statutory duty to promote public health.” 

Clive Betts, the chairman of the Commons communities and local government committee, said: “Tobacco products are a major contribution to the litter problem. Councils have to be very careful in any arrangements which would enable them to improve their image. The best solution would be for the Treasury to give up a small amount of tobacco revenue to help councils clean up.”

The Sunday Telegraph, Page: 13 The Sun, Page: 18

Comment

This story appears to be a classic case of government talking out of both sides of its mouth again. It was not so long ago that some minister or other, was suggesting that the polluter should pay. From memory, this was suggestion was focussed on the fast food industry detritus that our roads and motorways were and are awash with, but both the principle and the issue are the same.  

Councils are now lumbered with the job of stopping us all from becoming 250lb burger eating, booze swilling chain smokers, whilst at the same time being told, by George Osbourne, to do it all with reduced funding.  
Taking ‘juniors’ message to its logical conclusion.  This means that all of the revenue the government receives from tobacco and alcohol taxes, along with various taxes received from the companies that produce the stuff and those that produce and peddle any form of fast food, is somehow tainted and should not be accepted by any government department charged with improving public health – well that’s the NHS screwed then!
Just as farcical, is the junior minister’s suggestion that councils should spend thousands of pounds of cash taking legal advice – I wonder if this particular Minster has any outside interests involving the legal profession? Parliament is of course full of lawyers and barristers.  

Personally, I don’t mind being ‘undermined’ a bit in the public health role – whatever that means in legal terms- if it helps me to get a bit more rubbish of of our streets!