1. Financing Growth in Local Authorities Alison Scott Assistant Director, Policy and Technical CIPFA

2. cipfa.org.ukwww.cipfa.org Business Rates Retention

3. cipfa.org.ukwww.cipfa.org Non-Domestic Rates - current Ratepayers Collection Fund Billing Authority General Fund Preceptors Central Government

4. cipfa.org.ukwww.cipfa.org Non-Domestic Rates - current Ratepayers Collection Fund Billing Authority General Fund Central Government Preceptors

5. cipfa.org.ukwww.cipfa.org Non-Domestic Rates - Proposed Ratepayers Collection Fund Billing Authority General Fund Central Government Preceptors

6. cipfa.org.ukwww.cipfa.org Non-Domestic Rates - Proposed Ratepayers Collection Fund Billing Authority General Fund Central Government Preceptors

7. cipfa.org.ukwww.cipfa.org Overview – Separate Fire Authority

8. cipfa.org.ukwww.cipfa.org Baselines, top-ups and tariffs  Non-Domestic Rates baseline  Average of contribution to pool over five years  Compared to the spending baseline  Top-up or tariff determined  Set out in LGF Report

9. cipfa.org.ukwww.cipfa.org Safety Nets and Levies  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

10. cipfa.org.ukwww.cipfa.org Budget Setting  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.

11. cipfa.org.ukwww.cipfa.org Put it all together... Ratepayers Collection Fund Billing Authority General Fund Central Government Preceptors

12. cipfa.org.ukwww.cipfa.org TIF, New Homes Bonus, Community Infrastructure Levy

13. cipfa.org.ukwww.cipfa.org Tax Increment Financing  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…  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

14. cipfa.org.ukwww.cipfa.org New Homes Bonus  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/

15. cipfa.org.ukwww.cipfa.org Community Infrastructure Levy  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;

16. cipfa.org.ukwww.cipfa.org Community Infrastructure Levy  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

17. cipfa.org.ukwww.cipfa.org Community Infrastructure Levy  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.

18. Any Questions?