Agenda item

To receive a report which informs Members about the business rate tax base in Kent and how this compares with other authorities in the south east, how the current 50% business rates retention funding system operates, and potential changes to business rates retention in the future.

Mr Shipton (Head of Finance Policy, Planning and Strategy) was in attendance for this item.

1.          Mr Shipton introduced the report and presented a series of slides which informed Members of the Committee about the business rate tax base in Kent and how this compared with other authorities in the south east, how the previous and current local government funding arrangements worked, how 50% business rates retention operated within the current funding system, and potential changes to funding baselines and business rates retention in the future.

Mr Shipton then responded to comments and questions from Members, including the following: -

a)  Mr Shipton talked about the different ways in which the Valuation Office Agency (VOA) assessed the rateable value of properties. He referred to the valuation of the Channel Tunnel and said that when the VOA assessed the rateable value, it was likely that they considered the turnover of the business.

b)  Mr Shipton said that the Channel Tunnel was included on the local rating list for Dover District Council and talked about the two rating lists, both local and central, referred to within the report.

c)  Mr Hotson, Cabinet Member for Corporate and Democratic Services talked about the potential diminution of office rental income in Kent. Mr Shipton said that office estate in Kent had always been relatively small when compared to the rest of south-east England with low rateable values.

d)  Mr Shipton said that when the Channel Tunnel was first listed in the 2017 revaluation, its business rateable value increased from £15.4m to £35m, however, the current value on the VOA list was £28m. He emphasised that it was important to focus on the high value premises as they accounted for the majority of business rates in the county.

e)   Mr Shipton talked about the scale of the funding differentials between London authorities and authorities across the rest of the England and how difficult it is to justify these differentials.  He said that Kent County Council regularly responded to government consultations and calls for evidence and had consistently challenged these funding differentials as an individual authority.

f)    Mr Shipton said that although consultation results within central government were always published, there was no justification provided to Councils in regard to the decisions that were made relating to funding arrangements. He added that Kent County Council continued to lobby with government to better understand the rationale behind the funding decisions that were being made.

g)   Mr Long, Cabinet Lead for Traded Services, Mrs Crabtree, Deputy Cabinet Member for Finance and Traded Services and Mr Hotson, Cabinet Member for Corporate and Democratic Services expressed their views in relation to the funding differentials between local authorities in England and said that Kent County Council regularly lobbied with government for fairer funding.

h)  Miss Carey, Cabinet Member for Customers, Communications and Performance talked about Kent County Council’s Fair Funding Review and the Council’s successes that were evident within the review which focused on providing better outcomes and a better future for local government for residents living in Kent. She added that Kent County Council had made significant savings in recent years and emphasised the importance of continuing to lobby with government in relation to fairer funding for local governments.

i)     Mr Shipton talked about the outcome of the 2017 revaluations and said that he could provide a detailed case study to Members of the Committee outside of the meeting which set out information in relation to how the revaluation figures within the tables in the report were calculated.

j)     Mr Shipton referred to the two-tier areas within the centrally retained business rates surpass revenue support grant graph in the report and said that the retained share was split, 80% to the lower tier, 18% to the upper tier and 2% to Fire. He talked about the risks that were associated with the 80%/20% split between lower and upper tier authorities and said that a safety net was in place for local authorities.

k)   Mr Shipton talked about the Fair Funding consultation on relative needs and resources that had been launched by government in December 2018, and in particular, the services proposed to be included within the foundation and service specific blocks. He gave the example of special needs transport which could be included in the foundation formula (with an area cost adjustment for counties similar to Kent where travel distances were greater) or in the children’s services block to reflect the specific demographic of individual’s with SEN in Kent.  He emphasised that the recent consultation had not included any details on how the relative needs for children’s services were proposed to be identified.

l)     Mr Shipton said that he would provide further information to Members of the Committee in relation to the Formula Grant calculations which were updated each year and the funding differentials between districts and councils once this information became available.

m)Mr Shipton confirmed that he would circulate the full version of the slides that had been presented to the Committee outside of the meeting.

2.          RESOLVED that the report and the accompanying presentation be noted.