Agenda item

Report of the Executive Director, Resources.

The Cabinet considered a report of the Executive Director, Resources, which sought approval of the 2014/15 Council Tax Base as required under the Local Authority (calculation of Council Tax Base) Regulations 2012.

In addition, following the localisation of Business Rates in April 2013, it was necessary for each authority to estimate the amount of business rates to be collected in the forthcoming financial year. The report recommended delegating the authority for determining this estimate to the Executive Director, Resources in consultation with the Cabinet Member (Strategic Finance and Resources).

The Council tax base was the measure of the taxable capacity of an area for the purpose of calculating an authority's Council Tax.  It represented the estimated number of Band D equivalent chargeable dwellings for the year.  It also took into account the authority's estimated Council Tax collection rate.

The report made the necessary calculations in accordance with the Local Authorities (Calculation of Council tax base) Regulations 2012 to establish the Council tax base for the City Council and its parishes.  These regulations applied to financial years beginning 1^st April 2013 onwards, and included the impact of the change from awarding Council Tax benefit to the introduction of a Council Tax Reduction Scheme.

Under the Reduction Scheme, the Council Tax base was reduced according to the amount of reductions awarded under the scheme, as the authority would be foregoing the relevant Council Tax income and instead would receive grant income outside of the Council Tax arrangements.  These reductions were reflected in the calculation of the Council tax base, in order to calculate the correct amount of band D Council Tax for the billing authority (Coventry City Council), the major precepting authorities (West Midlands Police and Crime Commissioner and the West Midlands Fire and Rescue Authority), and the local precepting authorities (Allesley Parish Council and Keresley Parish Council)

It was estimated that the effect on the tax base of the Reduction Scheme would be to reduce it by 20.87%.  The financial impact of the reduction in tax base would be partially offset by a grant from central government.  The tax bases for the parishes of Allesley and Keresley would also be reduced by 20.87% as a result of the Council Tax Reduction Scheme.  It was proposed that the Council transfers an element of the grant described above to offset the impact of the reduced tax base on tax income for the parish councils. It was proposed that Allesley and Keresley receive payments of £730 and £409 respectively to offset the effect of the tax base reduction.  These payments had been calculated to offset 90% of the effect of the tax base reduction, in keeping with the approach adopted nationally.  The details of the calculations were provided in appendix D to the report.

The report did not set the actual level of Council Tax in Coventry; that would be set by Council on the 25^th February 2014.  The determination of the tax base was one part of the process and must occur before 31^st January each year.

The technical nature of this report reflected the fact that the tax base calculation was prescribed by statute.  The tax base measured all properties in an area, relative to a band D property even though this is not representative of the typical domestic property in Coventry.  In fact 88% of properties in Coventry fall into bands A to C, which attract lower bills than Band D properties.

The 2012 Local Government Finance Act changed the method of allocating the revenue obtained from Business Rates.  Local authorities would retain a proportion of their business rates and, in addition, would either be charged a tariff or, as was the case for Coventry City Council, receive a top-up in order to maintain funding at levels similar to those received historically.  It would also mean that the authority’s future resources would be impacted by 49% of any increase or decrease in business rates.  Central Government would be affected by 50% of any change, and the West Midlands Fire and Rescue Authority would experience the remaining 1% effect.  West Midlands Police would not be affected by changes in business rates.

Regulations now required the Council to formally set an estimate of the business rates for the area for the forthcoming financial year by 31^st January at the latest.  This estimate was subject to a number of variable components and new financial regulations that required technical interpretation.  Therefore, it was recommended that the Executive Director, Resources be given delegated authority to agree the business rates estimate in consultation with the Cabinet Member (Strategic Finance and Resources) both for 2014/15 and on an on-going basis.  The Scheme of Delegation for Employees (in Part 3 of the Constitution) would need to be amended to reflect this new delegation. The Executive Director, Resources had delegated powers under paragraph 3.7 of the Constitution to make changes to the Scheme of Delegation to ensure that all delegated powers were assigned to relevant employees and would exercise this power to amend the Constitution accordingly.

RESOLVED that the Cabinet:-

1.  Agree that the Council Tax collection rate for 2014/15 be set at 98.5%

2.  Agree that, in accordance with the Local Authorities (Calculation of Tax Base) Regulations 2012, the amounts calculated by the City Council for 2014/15 shall be:

  a net tax base of 73,201.0 for the whole of the City Council area made up as follows:

3.  Agree that the following grant payments should be made to parish councils to reflect the impact in 2014/15 of Council Tax reductions on their tax bases:

4.   Delegate authority to the Executive Director, Resources, in consultation with the Cabinet Member (Strategic Finance and Resources), to determine an estimate of the business rates for the forthcoming financial year (completing the National Non Domestic Rates 1 (NNDR1) form), prior to submission to government.

5.  Delegate on-going authority to the Executive Director, Resources to determine annually the business rates estimate, in consultation with the Cabinet Member (Strategic Finance and Resources) and that he exercises his delegated power to amend the Scheme of Delegation for Employees (Part 3 of the Constitution) accordingly.