Meeting documents

Council Tax Setting Committee
Thursday, 28th February, 2013 7.00 pm


Date:	Tuesday, 15th January, 2013	Time:	7.00pm	Place:	Committee Room 3, Council Offices, Gernon Road, Letchworth Garden City

PRESENT:	Councillor T.W. Hone (Chairman), Councillor A.F. Hunter, Councillor Ian Mantle, Councillor Mrs L.A. Needham and Councillor Lawrence Oliver.
IN ATTENDANCE:	Strategic Director of Finance, Policy & Governance, Head of Revenues, Benefits & IT, Systems & Technical Manager, Revenues Manager, Accountancy Manager and Committee & Member Services Manager.
ALSO PRESENT:	Councillors David Kearns and R.A.C. Thake.

Item	Description/Resolution	Status	Action
PART I
1	APOLOGIES FOR ABSENCE There were no apologies for absence.	Noted
2	MINUTES Data/Council Tax Setting Committee/201302281900/Agenda/Minutes RESOLVED: That the Minutes of the meeting of the Committee held on 27 February 2012 be approved as a true record of the proceedings and signed by the Chairman.	Agreed
3	NOTIFICATION OF OTHER BUSINESS There was no notification of other business.	Noted
4	CHAIRMAN'S ANNOUNCEMENTS The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest needed to be declared immediately prior to the item in question.	Noted
5	PUBLIC PARTICIPATION There was no public participation.	Noted
6	COUNCIL TAX BASE 2013/14 Report Appendix A Appendix B The Committee considered a report of the Head of Revenues, Benefits and Information Technology seeking approval of the Council Tax Base for 2013/2014. The report contained the following appendices: Appendix A - Council Tax Base by Parish 2013/14; Appendix B - Example of Council Tax Base calculation for Letchworth Garden City. The Committee was informed that the abolition of Council Tax Benefit and a new way of providing support for Council Tax to low income families through the introduction of locally based Council Tax Reduction Schemes had meant that there had been changes to the way that the Council Tax Base was calculated for 2013/2014. The Committee noted that, since the implementation of Council Tax in 1993, Council Tax Benefit had been a demand-led Benefit, where the Council reduced liability to those who qualified and the subsequent shortfall in the Collection Fund was reimbursed through Council Tax Benefit Subsidy on a pound for pound basis (allowing for any Subsidy Penalties). From 2013/2014, there would be no Council Tax Benefit Subsidy and the local Council Tax Reduction Schemes would be funded from a cash limited Council Tax Reduction Scheme Grant, which was paid directly to each Major Precepting Authority (in this Council's case the County Council, District Council and Police & Crime Commissioner for Hertfordshire). A similar Grant was also paid to Local Precepting Authorities (Parish, Town and Community Councils) through funding initially paid to the District Council, which it had to distribute to the relevant Local Precepting Authorities. The Committee was advised that the legislation required the District Council to agree with its Local Precepting Authorities how the Grant should be distributed and this was the basis of the consultation that culminated with a meeting with Parish, Town and Community Councils held on 3 January 2013. Following the consultation with the Local Precepting Authorities, the position now was that for 2013/2014, they would receive their Council Tax Reduction Scheme Grant in proportion to the expected amount of Council Tax Reduction that would be awarded within each Local Council area, and the Major Precepting Authorities would receive their Council Tax Reduction Scheme Grant based on the formula devised by the Government. This was quite straightforward for 2013/2014, as each element of the Council Tax Reduction Scheme Grant was specifically identified. There was speculation that from 2014/2015, the Grant element attributable to the Local Precepting Authorities would be "rolled up" within the District Council's Revenue Support Grant and may not be so easily identifiable. In this case, further consultation with the Local Councils would be necessary for 2014/2015 onwards. The Committee noted that, in all cases, each Precepting Authority was expected to reduce its Council Tax Requirement (Precept) by the amount of Council Tax Reduction Scheme Grant awarded, as this was now paid directly to them. This meant that the funding for Council Tax Reduction Schemes was now effectively removed from the Collection Fund and therefore there had to be an adjustment to the Tax Base, otherwise too much revenue would be raised through Council Tax payments. Whilst the Council Tax Base had always had adjustments for Discounts and Exemptions, it had never previously made any allowance for Council Tax Benefit as this had been directly reimbursed into the Collection Fund. The Committee was informed that, to achieve this, the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012 introduced an additional element into the Council Tax Base calculation, referred to as item "Z". Item "Z" was the Council's estimate of the amount of Council Tax Reduction Scheme support to be awarded within each Council Tax Band within each Local Precepting Council area and the District as a whole. This figure was then converted into an equivalent number of properties, which was then deducted from the total, thereby reducing the Tax Base. This meant that there had to be a completely different approach taken to calculating item "Z" as there had to be an assumption of the level of Council Tax to be charged in order to estimate the amount of Council Tax Reduction Scheme support. Previously, the Council Tax Base was used to calculate the amount of Council Tax to be charged, whereas now an estimate of the amount of Council Tax charged had to be made in order to calculate the Council Tax Base. The Committee noted that advice received from the County Council and the Police & Crime Commissioner for Hertfordshire was that they were unlikely to increase Council Tax levels in 2013/2014, and NHDC had also made similar indications. For the purposes of this calculation therefore, it had been assumed that Council Tax levels would remain the same as for 2012/2013. In respect of Council Tax Exemptions and Discounts, the Committee was reminded that, at its meeting held on 13 December 2012, the Council had opted to apply a zero% Discount to empty properties undergoing structural repairs and a zero% Discount after twenty-eight days to other properties, which were empty and substantially unfurnished from 1 April 2013. These properties were previously Exempt from Council Tax and consequently because they would now be liable for Council Tax, this had increased the Council Tax Base. These changes to Discounts and Exemptions had resulted in nearly 600 properties being removed from the number of Exemptions in the Council Tax Base calculation. The Committee was advised that, in setting its Council Tax Base, the Council had always had to decide on its expected level of non-collection, and this had not changed under the new arrangements, For many years, the Council had assumed a non-collection rate of 1%. However, when considering the non-collection rate, there were a number of factors, other than eventually non-collected payments, which would impact on the collection rate as follows:- (i) The level of successful appeals against banding valuations; (ii) The impact of new properties coming into tax which may not be valued until the following year; (iii) The number of disablement applications, Discounts and Exemptions. The Committee noted that any surplus (or deficit) on the Council Tax Collection Fund was split between the major precepting authorities (the County Council, Hertfordshire Police and this Council) in proportion to the relative level of precept on the fund (approximately 77:10:13 County/Police/District in 2012/2013). The surplus could only be used to reduce (or increase in the case of a deficit) Council Tax bills in 2013/2014, but whereas the District proportion of the surplus reduced bills only in North Hertfordshire, the County and Police proportions were dissipated across the whole of Hertfordshire. The actual impact on bills would, therefore, depend not only upon the collection performance of NHDC, but of that of all other Hertfordshire authorities as well. The Committee was informed that collection performance in 2012/2013 had remained in line with the estimated position, despite the current economic climate. It was possible that, because many families who previously received 100% Council Tax Benefit would from 2013/2014 have to pay a proportion of their Council Tax, this could affect the collection rate, and so Council Tax arrears would increase. The Committee was advised that it was estimated that the change from Council Tax Benefit to the Council Tax Reduction Scheme could result in up to Â£1.8M, which was previously paid in Council Tax Benefit, now having to be collected. Most Billing Authorities were making an assumption that around 30% of this amount would not be collected, which would increase this Council's non-collection assumption by a further 0.8%. Analysis of the Council's collection performance showed that actual collection could expect to reach 99.5% within three years and 99.9% within ten years. On that basis, Officers were recommending that the non-collection rate should remain at 1% for 2013/2014. The Committee noted that it was estimated that, at the end of this financial year, there would be a surplus in the Collection Fund of approximately Â£26,000 attributable to the Council. The Tax Base for each Parish, based upon a 99% collection rate, was shown in Appendix A to the report. RESOLVED: (1) That a non-collection rate of 1% for 2013/2014 be approved; and (2) That the amount calculated by this Council as its Council Tax Base for 2013/2014 shall be Â£46,704.90 in total, and that the individual sums shown for each Parish, as set out in Appendix A to the report, be agreed. REASON FOR DECISION: To fulfil the statutory requirement to set a Council Tax Base for the District and to enable Major and Local Precepting Authorities to set their levels of Council Tax for 2013/2014.	Agreed
7	NATIONAL NON-DOMESTIC RATE (NNDR) RETURN 1 - 2013/2014 Report Appendix 1 The Committee considered a report of the Head of Revenues, Benefits and Information Technology in respect of the National Non-Domestic Rate (NNDR) Return 1 for 2013/2014. The report contained the following appendix: Appendix 1 - NNDR 1 Return. The Committee was advised that the Council had always had a requirement to make an NNDR1 Return to the Secretary of State each year, this being the Council's estimate of the likely income from Non-Domestic Rates for the following financial year. There had not been a requirement, until this year, for that Return to be approved by Members. The Committee noted that, in December 2011, the Government had published its proposals for a Business Rates Retention Scheme alongside the introduction of the Local Government Finance Bill, which became an Act of Parliament in November 2012. The intention of this proposal was to ensure that a proportion of Non-Domestic Rates was locally retained. In November 2012, the Government issued a Policy Statement reflecting its desire to see the Business Rates Retention Scheme at the heart of its reform agenda aimed at achieving two of its key priorities: economic growth and localism. The Committee further noted that the amount to be retained by Billing Authorities, and the amount to be paid to Central Government and Major Precepting Authorities, was to be fixed at the start of the financial year on the basis of the Billing Authority's estimate of its Non-Domestic Rating income for the year (the NNDR1 Return). For this reason, the Government had decided that this return should now be subject to approval by Members. The basis on which a Billing Authority was to make that estimate would be set out in regulations made under the provisions of the Local Government Act 1988. These Regulations had still to be laid before Parliament and were expected soon. The Committee was informed that, in the meantime, the expected requirements for the calculation of Non-Domestic Rating income for the year could be found in Schedule 1 of the consultation draft of the Non-Domestic Rating (Rates Retention) Regulations (the Retention Regulations). It was expected that the Regulations would require Billing Authorities to calculate the sum due, for that year, and inform: (a) The Secretary of State in respect of the "central share" of their Non-Domestic Rating income; and (b) Their Major Precepting Authorities. In respect of changes to the financial information required in the NNDR1 Return, the Committee was advised that the Business Rates Retention Regulations would require a Billing Authority to calculate its Non-Domestic Rating income by estimating the net payments from ratepayers that would be credited to its collection fund income (after having taken account of any rate relief provided to ratepayers and any repayments made to ratepayers) In completing the NNDR1, Billing Authorities should take account of the two measures announced by the Chancellor in his Autumn Statement: - A further one year extension of the temporary increase in Small Business Rate Relief; and - Extended exemption from Non-Domestic Rates for empty new builds (which would be exempt from Empty Property Rates for up to 18 months up to state aid limits between 1 October 2013 and 31 October 2016). The Committee noted that Appendix 1 to the report illustrated the provisional 2013/14 NNDR 1 Return. In accordance with directions from the Department of Communities and Local Government (DCLG), the final certified copy was required to be submitted by no later than 31 January 2013. The NNDR 1 consisted of a series of financial entries relating to individual inputs. The figures illustrated in Appendix 1 (NNDR 1, Section 2) were subject to change before the submission date as the final Regulations were laid and additional guidance was published by DCLG. Under the Rates Retention Scheme, no amendments or adjustments could be made to the final NNDR 1 Return during the 2013/14 financial year. In previous years, a Billing Authority could submit an adjustment return (NNDR 2) during the financial year to allow for changes to collectable debit or other matters that had a material affect on the Billing Authority's projected income to the NNDR Pool. The methodology and assumptions made in respect of the NNDR 1 Return were set out in Section 8.2 of the report, and were explained by the Systems and Technical Manager, who answered a number of Members' questions. RESOLVED: (1) That the National Non-Domestic Rate (NNDR) 1 Return, as detailed at Appendix 1 to the report, be approved; and (2) That any amendments required on the Return resulting from Regulations and Guidance to be published before the submission date of 31 January 2013, be delegated to the Strategic Director of Finance, Policy and Governance, in consultation with the Chairman of the Committee. REASON FOR DECISION: To comply with statutory requirements.	Agreed

Published on Monday, 11th February, 2013

7.45pm