To understand the current business rate profile in Shropshire and how this feeds into the work of Shropshire Council in enabling growth of both existing businesses and attracting new businesses.

The Revenues and Benefits Service Manager gave a presentation on the Business Rate System [copy attached to the signed minutes].  Members noted that the majority of businesses within the Shropshire Council area fell below the threshold for the payment of business rates. The County had in excess of 12,000 businesses on its rating list with a total rateable value in excess of £230m but three quarters of these were classed as small and were exempt from payment, and although the Council received no finance from them it still had to administer them with the associated costs.  Only 141 businesses were categorised as large with a rateable value of over £200k.  These were mainly large factories, warehouses, supermarkets and stores.  These made up of 1.1% of the tax base but provided 28.6% of the gross rateable value. 

The Revenues and Benefits Service Manager continued that the Local Authority had no control over the rateable values as they were set by the Valuation Office, an Executive Agency of HMRC. The multiplier was also set by Central Government and adjusted yearly for inflation. The Rateable Values were based on property rental values with revaluation undertaken every five years.  He explained that the purpose of National Revaluations was not to generate greater income but to redistribute the taxation burden more fairly.  Prosperous areas had higher property rental values which impacted on the business rates levied.   Members noted that there were two multipliers, the standard multiplier and the small business rate multiplier.  This would give the starting point for the rates bill but there were a number of reliefs available both statutory and discretionary. 

In response to a Members question, the Revenues and Benefits Service Manager explained that the small business rate relief available was based on the rateable value of the business plus specific thresholds for second properties.  The maximum RV for a second property is £2,899 and the aggregate of second properties must not exceed £19.999. He gave the example of a business operating out of one location with a RV of less than £12,000 which exempted it from the payment of business rates.  If the proprietors opened a second shop, which also had a RV of £12,000 both locations would be subject to Business rates even though both premises were individually under the threshold as the company’s RV had been increased to above the exemption threshold. 

Members discussed the issue of Business Rate Relief following the recent revaluation of business rates and some businesses facing substantial increases in the rates payable on their premises.  Members commented on the misinformation in the media about transitional relief.

The Head of Finance, Governance and Assurance confirmed that central Government had not yet passed the necessary legislation that would lead to local authorities retaining 100% of business rates received, although a number of local authorities were involved in pilot schemes.  These were being extended to rural areas but the protection offered in the early schemes, where if income received was less than would have been received if the authority was not part of the scheme, was being removed which made inclusion more risky.

Members noted that the Council had a Discretionary Fund approved by Cabinet but to access funds businesses had to complete an application form which had been sent out with rate demands.  Only 50-60% of eligible businesses had applied for relief. 

Members discussed the issues that retailers had competing against on-line retailers who did not have to pay the same business rates and the unfair competition of charity shops who were not subject to business rates.  Members suggested that communication should be improved with businesses to make them aware of how the business rates they paid were used and this would lead to a sustainable meaningful relationship.  

The Director of Place and Enterprise confirmed that the Council had no control over the levying of business rates, only the discretionary relief that could be offered and how this could be used to stimulate growth in the County. 

Simon McVikker, representing the Shropshire Business Board, added that the local Chamber of Commerce would be happy to assist with improving communication between the local authority and businesses. 

RESOLVED:

i.             That Officers would work with Shropshire Business Board on a Business Rates model that helped attract new businesses, as well as ensure growth of existing businesses in the county.

ii.            That the Report be noted.