Rates Retention Scheme: Pooling Proposal
1. Pool title or description
Nottinghamshire County Pool – all local authorities in Nottinghamshire (excluding Nottingham City Council, Nottinghamshire Fire Authority and Nottinghamshire Police Authority)
2. Lead Contact for pool;
Paul Simpson Director of Finance & Procurement Nottinghamshire County Council County Hall West Bridgford, Nottingham, NG2 7QP 01159 773441
3. Local authorities included in pool:
Nottinghamshire County Council, Ashfield District Council, Mansfield District Council, Gedling Borough Council, Bassetlaw District Council, Broxtowe Borough Council, Newark & Sherwood District Council and Rushcliffe Borough Council.
4. Counties and / or Local Enterprise Partnership(s) pool covers:
The pooling area covers Nottinghamshire County, being the two-tier area comprising the County Council and the District Councils of Ashfield, Bassetlaw, Broxtowe, Gedling, Mansfield, Newark & Sherwood and Rushcliffe. At this time, the pool excludes Nottingham City Council and the Nottinghamshire Police and Fire authorities. The pooling area reflects longstanding relationships and service integration between the County and District levels and in part, relationships with the D2N2 Local Enterprise Partnership (LEP).
5. What is the aim / rationale for the pool? Please briefly describe:
As referenced above, the pool builds on the already strong and well-established service relationships, with the overall aim of growing the local economy. Specifically, opportunities will be exploited to enhance the pool through links to wider funding sources such as the D2N2 LEP’s Growing Places Funding and potentially, European Funding where that exists. This will allow the partners to prioritise activity that increases the competitiveness of the area and stimulates private sector economic growth.
It will also allow for the planning of economic growth across the functional economic area covered by the pool rather than being constricted by local authority administrative boundaries. Furthermore, the financial benefits of any business growth will be shared by the authorities included in the pool.
We are also interested in collectively exploring a single investment approach, aligned with proposals currently in development for wider investment funds across the City and County.
1 6. Does the pool support the area’s growth priorities (including Local Enterprise Partnership strategy and priorities)? If so, briefly describe how:
The respective strategies of the local authorities at District and County levels prioritise the development of the local economies. The proposed pool will offer the opportunity to build a critical mass to the funding required for critical economic investment and afford the Councils to work collectively in partnership with the private sector to prioritise economic development activity.
The County Council is currently facilitating the development of a Nottinghamshire Growth Plan, which in conjunction with individual growth plans of District Councils, has been openly welcomed by partners and notably the private sector with its overt focus on promoting growth. At the time of developing this Pooling Proposal, the Nottinghamshire Growth Plan is the subject of formal consultation with 3 inter-related themes as follows:
• Competitive Business Growth • Connectivity • Aspiration and Talent
The Growth Plan is designed to bring a strategic approach to our collective economic development ambitions and guide the deployment of our resources. The Pooling Proposal will sit within this context and potentially alongside other external funding and creative financial mechanisms (to be explored) could create the potential to resource activity under the themes, such as the unlocking of stalled sites and essential infrastructure developments alongside investment in new, growing and expanding businesses.
The partners’ ambitions are aligned with the D2N2 LEP’s adopted Strategic Priorities and Areas of Economic Focus. Synergies are facilitated by the County Council’s role as a D2N2 LEP Board member and through the support of the Councils in delivering the LEP’s strategy.
The D2N2 LEP has already explored pooling arrangements regarding the retention of business rates growth through the Enterprise Zone across the relevant authorities. Further, the re-payments via the Growing Places Fund allocations will be the subject of re-investment within the local economy. The proposed pooling of business rates offers opportunities to “match” the LEP resources to ensure key projects maximising economic growth are brought forward quickly and effectively.
7. Is there a pooling agreement setting out governance structures for management of the pool, decision making structures, how investment decisions will be made, and how the pool will handle dissolution? Please enclose a copy of the pooling agreement.
Yes – our proposed pooling agreement is attached at Appendix 1.
It is envisaged that rather than establish new and separate governance arrangements for the administration of the Nottinghamshire pool, the member authorities will utilise existing governance arrangements, namely the Leaders and Chief Executives meetings. These are held regularly to provide an opportunity for the member authorities to:
• discuss issues of common interest, • promote partnership working, • jointly promote Nottinghamshire as a place to live, work and visit, and
2 • explore opportunities to share resources as a means of promoting economic growth and to continue to provide high quality public services to Nottinghamshire taxpayers.
Furthermore, the Chief Finance Officers (S151 Officers) of all the authorities also meet monthly, again to discuss relevant issues. It is therefore proposed that the Lead Authority (Nottinghamshire County Council) will provide regular updates/reports to the CFO’s, not only on the operation of the pool and the governance arrangements in terms of membership, dissolution etc, but more importantly the comparison of expected to actual levels of resources generated.
This would then form the basis on which opportunities to utilise resources generated from the pool in the form of the Net Retained Levy, could be identified and constructed, in accordance with the priorities set out in the Nottinghamshire Growth Plan.
It is envisaged that this would give rise to business cases that would identify investment opportunities across the County, which would include:
• rationale for investment • potential risks/rewards • economic/social/environmental benefits
These business cases would need appropriate officer input to confirm robustness, due diligence etc, to then be presented for agreement by Leaders/Chief Executives/LEP. These proposals would ensure that not only are the financial implications of the Pool fully understood by all Members, but would also embed and strengthen partnership working across Nottinghamshire and the wider LEP, and would facilitate resources being targeted on shared economic priorities.
Any governance issues pertinent to individual authorities would be managed within existing member authority governance arrangements e.g. through formal decision making bodies such as Full Council/Cabinet/Finance Committee or through appropriate Officer/Member delegated powers.
Day to day issues will be dealt with through normal communication routes i.e. email/telephone.
8. Has the pooling agreement been signed off by the Chief Executive and Section 151 Officer for each local authority within the pool? Please enclosed signed confirmation from each authority.
The relevant signatures from each authority’s Chief Executive and S151 Officer are included within the Governance proposal.
9. Is there a lead authority that has been agreed by the pool? If so, which? Please enclose confirmation from the Section 151 Officer for that authority that it is happy to act as lead authority, and how it plans to manage the pooled resources it holds.
All authorities have agreed that Nottinghamshire County Council will act as the lead authority. The Section 151 Officer (Paul Simpson) has signed at Appendix 2 to agree this. The proposed approach to the management of the pooled funds is set out in Appendix 1.
3 10. Please briefly set out how the pool will provide transparency to its working and decision-making.
The Memorandum of Understanding between the 7 authorities (Appendix 1) states that the pool will have as a key principle, an approach of openness and transparency. Regular information on the operation of the pool will be shared with all pool Members. As set out in Section 7, existing governance arrangements e.g. Leaders and Chief Executive Meetings will be used to avoid the need for separate governance arrangements to be established.
4 Appendix 1 Nottinghamshire Business Rate Pool
Memorandum of Understanding
This Memorandum of Understanding is made between Nottinghamshire County Council, Ashfield District Council, Mansfield District Council, Bassetlaw District Council, Newark and Sherwood District Council, Gedling Borough Council and Broxtowe Borough Council (together referred to as ‘Pool Members’).
1. Purpose
1.1. It is the intention of the Pool Members to improve the well-being of the communities we serve. By working together we can retain a greater proportion of any business rate growth within the Pool area, providing opportunities to promote further economic growth as well as building financial resilience.
1.2. It is the purpose of this Memorandum of Understanding to act as a Statement of Intent that will support the realisation of these benefits. The Pool Members have agreed to enter into this Memorandum of Understanding to formalise their commitment and to set out their respective roles and responsibilities.
2. Glossary of Key Terms
2.1. There are a number of technical terms used throughout this document. The meanings of these terms are as follows:
Levy A payment due to central government of the disproportionate benefit to baseline funding levels experienced as a result of business rates growth. Calculated using a nationally set formula.
Pool A voluntary arrangement amongst a group of local authorities to pool the business rates generated locally to ensure at least some of any levy is retained locally.
Spending An authority’s Baseline Funding Level under the business Baseline rates retention scheme.
Net Retained The amount of levy retained locally. This is calculated at Levy the sum of levies to be paid by individual Pool members if the Pool did not exist less the levy to be paid by the Pool less any safety net funding that would have been due to individual Pool members if the Pool did not exist and less the administrative costs of the Pool
Safety Net The additional funding received by an authority, from central government, if, in the government’s opinion, the decline in business rates in any year would leave an authority with insufficient resources. Calculated using a
5 Appendix 1
national formula
Local Volatility An element of the Net Retained Levy set aside in a Fund Fund to provide protection for Pool members from falls in business rate income. Calculated using a local formula
Memorandum The amount of the Local Volatility Fund contributed by or Local Volatility paid out to individual Pool members. To be used as the Fund basis for distributing any retained resources or deciding outstanding liabilities consequent on a change in the pools membership
NNDR1 A central government form used to estimate a future year’s business rates. Prepared on an annual basis by all billing authorities and used as the basis for allocations
Lead Authority The Pool member who will act as the lead in managing the Pool’s resources and being the key contact between central government and the Pool
3. Key Principles
3.1. The Pool Members agree that they will operate the Pool in accordance with the following principles:
• Increase in Resources The Pool Members recognise that the fundamental objective of the Pool is to generate increased resources for the County of Nottinghamshire, and individual Pool Members
• Risk Management The Pool Members agree to protect and mitigate as far as possible the risks associated with the level of business rate income. Income streams to the Pool Members may be more volatile, whether as the result of a one-off event (for example a successful large appeal) or something structural within an area (for example the closure of a major plant). The pooling arrangements should reduce this volatility.
• Fairness The Pool Members agree to share the costs, risks and benefits of local business rate retention on the basis set out in paragraph 11 of this memorandum. Pool Members should be no worse off than if they were outside the Pool.
• Transparency, Openness and Honesty Pool Members will be open and trusting in their dealings with each other, make information and analysis available to each other, discuss and develop ideas openly and contribute fully to all aspects of making the Pool successful. It also includes sharing data and intelligence outside of the formal reporting mechanisms on any substantive issues relating to business rate retention within their area.
6 Appendix 1
• Reasonableness of Decision-Making Pool Members agree that all decisions made in relation to this Memorandum of Understanding shall be made by them acting reasonably and in good faith.
4. Binding Memorandum
4.1. This Memorandum of Understanding is produced as a Statement of Intent and, with the exception of Sections 5, 10 and 11, is not intended to be legally binding.
4.2. Sections 5, 10 and 11 are intended to be legally binding and to create obligations between Pool Members with immediate effect from the execution of this Memorandum of Understanding.
4.3. Pool Members have approved this Memorandum of Understanding in advance of the Secretary of State designating the Pool for the purposes of the Business Rates Retention Scheme. If the Secretary of State adds conditions to the designation, either initially or at any point in the future an immediate review of this Memorandum of Understanding, as outlined in Section 12, will be triggered.
5. Term of Memorandum
5.1. This Memorandum of Understanding shall continue to be in place unless terminated in accordance with these terms.
5.2. Any Pool Member can leave the Pool from 1 April of the following financial year providing:
- Written notice is given to other Pool Members and DCLG in at least sufficient time for the Pool to remain in place for the remaining Pool Members, should they wish it to continue. Sufficient time is taken to be at least the time specified by DCLG in regulations and/or guidance. - All liabilities to and from the Pool are paid.
6. Decision-Making
6.1. The Section 151 Officers shall be responsible for overseeing the operation of the Pool and making recommendations to their respective authorities about the way forward.
6.2. The Lead Authority shall ensure that reports are sent to the Section 151 Officers of each Pool Member at least on a quarterly basis updating them of the performance of the Pool and advising them of any issues. These reports should be available within six weeks of the quarter end.
6.3. For the avoidance of doubt, any substantive decision e.g. commitment of resources, changes in governance or major operational changes shall be referred to each Pool Members’ decision-making regime.
7 Appendix 1
7. Dispute Resolution
7.1. The Pool Members shall attempt in good faith to negotiate a settlement to any dispute arising between them arising out of or in connection to this Memorandum of Understanding. If the Section 151 officers cannot resolve this, it will be referred to a meeting of all Member authorities Heads of Paid Service for consideration. If no resolution can be found the matter will be determined by a meeting of the Member authorities’ Leaders. If there is still no agreement, the matter may be referred to an independent adjudicator.
8. Resourcing
8.1. Each Pool Member will provide the appropriate resources and will act with integrity and consistency to support the intention set out in this Memorandum of Understanding.
8.2. £10,000 a year is allocated to the Lead Authority in recognition of the additional workload the administration of the pool places on the Lead Authority, subject to an annual review. This allocation will be the first call on the Net Retained Levy before any allocations are made.
9. Lead Authority
9.1. Nottinghamshire County Council will act as the Lead Authority for the Nottinghamshire Pool.
9.2. The responsibilities of the Lead Authority are:
• To make payments on behalf of the Pool to central government and Pool Members on time and in accordance with the schedule of payments, and confirm to each Pool Member that this has been done, • To liaise with and complete all formal Pool returns to central government on behalf of Pool Members, • To keep Pool Members informed of all communications with central government, • To manage the resources of the Pool in accordance with this MoU, • To prepare quarterly monitoring reports and consolidate intelligence on future resource levels on behalf of the Pool, • To prepare the annual report of the Pool’s activity, • To co-ordinate the annual review and refresh of the Pool’s governance arrangements and the methodology for the allocation of resources, • To consult on and administer the schedule of payments between Pool Members in respect of all financial transactions that form part of the Pool’s resources, and • To lead on the timely provision of the information required, by Pool Members, in preparing their annual Statement of Accounts in relation to the activities and resources of the Pool.
9.3. To assist the Lead Authority in fulfilling this role, the responsibilities of individual Pool Members are:
8 Appendix 1
• To provide accurate, timely information to the Lead Authority to enable all formal Pool returns to central government to be completed, • To inform the Lead Authority, as soon as is practical, of any intelligence that may impact of the resources of the Pool either in the current year or in future years, • To provide such information as the Section 151 Officers agree is reasonable and necessary to monitor/forecast the Pool’s resources within the timescales agreed, • To provide such information as the Section 151 Officers agree is reasonable and necessary on the use of the Pool’s resources for inclusion in the Pool’s annual report, and • To provide accurate and timely information on the end of year financial performance of the business rates collection fund to enable the Lead Authority to calculate the end of year accounting entries needed. • To make payments to the Pool on time and in accordance with the schedule of payments
10. Cash Management
10.1. The governing principle for the cash management of the Pool is that no individual Pool Member, including the Lead Authority, should incur a treasury management gain or loss as a result of the transfer of funds between Pool Members.
10.2. The Pool will receive/pay interest annually on any retained resource at the average investment rate of the Lead Authority.
10.3. Interest will be calculated on an annual basis and allocated to Pool Members in proportion to the balances on the Memorandum Local Volatility Fund.
10.4. Where the Pool is required to make a payment to the Secretary of State, each authority in the Pool is jointly and severally liable to make that payment.
10.5. Any late payment may be subject to a late payment interest charge at base rate plus 4%.
11. Allocation of Pool Resources
Principles
11.1. The allocation of resources will be based on the following principles:
• The lead authority shall receive its administration fee prior to any payments to individual authorities (and this amount is excluded from the funding allocations based on the agreed criteria).
• Where there are sufficient resources received, no authority will receive a lower level of funding than they would have received without the Pool
• Any additional resource is generated because of the Pool and therefore the benefits will be shared across the Pool using the methodology set out in section 11.2 below.
9 Appendix 1
• A balance between the level of risk and reward for individual Pool members will be maintained
• The allocation of any additional resource will reflect where the growth occurred and the relative spending need of Pool Members.
• The rationale for the Pool is to encourage economic growth therefore Pool members are encouraged to use the additional resource to promote further economic growth.
Basis of Allocation
11.2. The underlying basis of allocation is as follows:
• A: The running costs of the pool will be paid to the lead authority.
• B: Each individual authority, where resources allow, will receive the same level of funding they would have received without the Pool (excluding running costs).
• The remaining amount will be the net retained levy.
• If after commitment A, Commitment B cannot be met, each authority will receive an allocation of resources proportional to the amount that would have been received without the pool. For example, if £10m was required to meet commitment B and only £9.8m in resources was available, each authority would receive 98% of the amount that would have been received without the pool.
Allocation of the Net Retained Levy
11.3. The allocation of the Net Retained Levy will be calculated as follows:
• 2% of the Net Retained Levy will be allocated to the Local Volatility Fund
• 48% of the Net Retained Levy will be allocated to Pool Members in proportion to their share of the gross levy
• 50% of the Net Retained Levy will be allocated to Pool Members in proportion to their spending baseline
11.4. Subject to budgetary constraints, Pool Members intend to allocate a significant proportion of the Net Retained Levy allocated to them for projects that support:
• the creation of an environment where it is easy for businesses to start, locate and thrive,
• acceleration of the growth of our economy through targeted support in our key strategic sectors, and
• tackling the skills problems by aligning supply and demand.
10 Appendix 1
11.5. In making these allocations Pool Members are emphasising their commitment to at least maintaining their underlying business rate base in real terms.
11.6. When the Local Volatility Fund has sufficient resource to meet any reasonable downwards volatility in local business rate income it is the intention of Pool Members that the 2% Local Volatility Fund, from the Net Retained Levy, is redirected to economic development across the Pool area, in accordance with the governance arrangements proposed.
Allocation of the Local Volatility Fund
11.7. Allocations from the Local Volatility Fund will be made on the following basis:
• Where sufficient resources allow, the Pool will operate with a local safety net of –2%. The calculation of which is based upon the governments methodology of calculating the safety net i.e. 2% of the needs baseline
• if there are insufficient resources within the fund at the end of a financial year to meet the local safety net (based on levy receipts in year and existing resources within the fund from previous years), resources will be allocated up to a safety net level that the fund is able to support, with any higher levels of payment already made, refunded to the fund.
• Allocations to fund an authority up to the level of the local safety net will be made directly from the Pool Local Volatility Fund net of any of the Net Retained Levy share allocated to the authority in that year.
• A Memorandum Local Volatility Fund will be maintained for each Pool Member recording their allocations to and from the Local Volatility Fund.
• Where the need for an allocation from the Local Volatility Fund is identified on the NNDR1 return prior to the start of the financial year, payments will be made to Pool Members on the same schedule of payments dates agreed for tariff and top-up payments, providing sufficient resources are already in the fund or are expected from the fund through levy payments.
Allocation of the Memorandum Local Volatility Fund
11.8. When a Pool member leaves or the Pool is dissolved each authority will refund the Pool or receive from the Pool the balance in their Memorandum Local Volatility Fund.
12. Review Arrangements
12.1. A review and refresh of the Pool’s governance arrangements and the methodology for the allocation of resources will be undertaken on an annual basis. It will be co- ordinated by the Lead Authority on behalf of the Section 151 Officers and in sufficient time for any changes in Pool Membership to be in place before the start of the following financial year.
11 Appendix 2
Signatories on behalf of the Pool Members
AGREEMENT TO THE PROPOSAL TO POOL BUSINESS RATES AMONGST 8 NOTTINGHAMSHIRE LOCAL AUTHORITIES
The Chief Executives and Section 151 Officers of the 8 councils have agreed to this proposal.
They have agreed that Nottinghamshire County Council should act as the lead authority1.
Philip Marshall Dave Greenwood Chief Executive Deputy Chief Ashfield District Council Executive (Resources) Section 151 Officer Ashfield District Council Neil Taylor Mike Hill Interim Chief Executive Head of Finance Bassetlaw District Section 151 Officer
Council Bassetlaw District Council Ruth Hyde Malcolm Staley Chief Executive Deputy Chief Broxtowe Borough Executive Council Section 151 Officer Broxtowe Borough Council John Robinson Mark Kimberley Chief Executive Director of Corporate Gedling Borough Services
Council Section 151 Officer Gedling Borough Council Ruth Marlow Mick Andrews Managing Director Head of Finance, Mansfield District Property and Revenue Council Services Section 151 Officer
Mansfield District Council Andrew Muter David Dickinson Chief Executive Director of Resources Newark and Sherwood Section 151 Officer
District Council Newark and Sherwood District Council Mick Burrows Paul Simpson Chief Executive Director of Finance & Nottinghamshire County Procurement Council Section 151 Officer Nottinghamshire County Council Allen Graham Colin Bullet Chief Executive Assistant Chief Rushcliffe Borough Executive Council Section 151 Officer Rushcliffe Borough Council
1 - The signature of the S151 Officer of Nottinghamshire, also confirms his agreement to act as the Lead Officer for the pool.
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