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Wolverhampton City Council OPEN EXECUTIVE DECISION ITEM (AMBER)

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Wolverhampton City Council OPEN EXECUTIVE DECISION ITEM (AMBER) Agenda Item: 5B Wolverhampton City Council OPEN EXECUTIVE DECISION ITEM (AMBER) Cabinet / Cabinet Panel RESOURCES PANEL Date 29.03.2011 Portfolio(s) COUNCILLOR ANDREW JOHNSON (RESOURCES, GOVERNANCE AND SUPPORT SERVICES) Originating Service Group(s) CUSTOMER AND SHARED SERVICES Contact Officer(s)/ P MAIN Telephone Number(s) EXT. 4410 KEY DECISION: NO IN FORWARD PLAN: NO Title DISCRETIONARY RATE RELIEF FOR 2011/2012 1. Recommendations (i) Approve the Scheme for Discretionary Rate Relief. (ii) Agree to the continuation of discretionary rate relief for those organisations listed in the attached schedules for a further year from 1 April 2011 to 31 March 2012 (iii) Agree that approval be given to the estimated amount of discretionary rate relief for 2011/2012 subject to each organisation confirming that they are continuing to occupy the premises for the purpose for which rate relief was originally granted. (iv) Agree that new applications continue to be submitted for consideration by this Resources Panel. (v) Agree that any time expired 2011/2012 externally financed schemes solely occupying premises, which are to be supported by the Council in 2011/2012 continue to be granted maximum discretionary rate relief subject to the completion of an application form. 1 DISCRETIONARY RATE RELIEF FOR 2011/2012 1. PURPOSE OF REPORT 1.1. To approve the Scheme for Discretionary Rate Relief (Appendix 1) for 2011/2012 1.2. To approve individual discretionary rate relief for 2011/2012, as set out in the attached schedules. 2. BACKGROUND 2.1 Discretionary rate relief (Appendix 1) is granted under Section 47 of the Local Government Finance Act 1988. The existing scheme is set out at Appendix 1 and is recommended for continued use throughout the next financial year. 2.2 Discretionary rate relief for existing organisations is reviewed annually and approved for one year only, subject to there being no change in circumstances. Each organisation already in receipt of discretionary rate relief is required to certify annually that there is no change in circumstances. New applications are submitted to the Cabinet (Resources) Panel for consideration. Discretionary rate relief is not extended to existing organisations receiving mandatory rate relief only, having regard to the level of commitments against the approved budget provision. Mandatory Relief 2.3 Mandatory rate relief of 80% is automatically granted to charitable bodies or organisations with charitable objectives in accordance with Section 43(5) of the Local Government Finance Act 1988. The cost of this relief is met in full from the Government’s National Pool for Business Rates (NNDR). This information is given in this report in order to provide a full picture of the total amount of rate relief granted to organisations by the City Council. 2.4 In order for an organisation to obtain mandatory rate relief, it must not be established or conducted for profit and its main objects must be charitable or otherwise philanthropic, religious or concerned with education, social welfare, science, literature or the fine arts. The test to be applied for initially determining charitable status is formal registration with the Charity Commissioners. In a limited number of other cases, the charitable objects of the organisation must be included in its memorandum and articles of association and it must be clear that no commercial trading activities are being carried out. The advice of the Monitoring Officer is sought on these applications. Charity shops must predominantly trade in donated second-hand goods, surplus stocks, or rejects; otherwise they are not eligible for mandatory rate relief. Discretionary Relief 2.5 Discretionary rate relief is granted to local organisations but not to national organisations. In March 1998, the former Finance and General Purposes Committee reviewed the extension of discretionary rate relief to charities, and decided not to change its policy. 2 2.6 The City Council cannot grant rate relief to itself in accordance with existing legislation but it can grant relief to organisations that occupy City Council premises. It is therefore important that voluntary organisations that occupy Council premises become liable for the rates due so that relief can then be granted to them. A regular review is carried out in order to maximise rate relief in this way. Rate relief can only be granted to voluntary organisations who solely occupy premises with a separate rateable value and are responsible for the payment of rates themselves. No relief can be granted for part occupation unless this is separately rated. 2.7 The voluntary organisations listed on the attached schedules were previously approved by Cabinet (Resources) Panel. Where an organisation has ceased occupation of its premises, it is no longer included. 2.8 Each application for discretionary rate relief is considered on its merits based on criteria recommended by the Department for Communities and Local Government and local authority associations and set out in Appendix 1 (paragraphs 1.1. to 1.6.). Additional local criteria (paragraphs 2.1. to 2.5.) have been adopted over time. In the case of sports clubs, specific local criteria (paragraph 3) were agreed by the former Finance and General Purposes Committee in February 1991. 2.9 Applications have been made in the past by Working Mens’ Clubs for mandatory and discretionary rate relief. The CIU affiliated clubs are registered as a Friendly Society but are not entitled to mandatory rate relief because they are not charities and/or do not have charitable objectives; they benefit their members rather than the community at large. In most cases they have a bar and operate to make a profit, an objective which conflicts in most circumstances with charitable aims. Furthermore, the criteria adopted for discretionary rate relief restricts it to organisations where membership fees should not be set at such a high level as to exclude the general community. The above position is based on advice received in the past from the Monitoring Officer and this has been confirmed with the Council’s External Auditor. 2.10 Other Funding Regimes There may be a limited number of externally financed schemes that could become time expired in the next financial year and these are still subject to a final decision on the continuation of funding. Very few of these schemes occupy separate rateable premises for which rate relief has not previously been given. It is the normal practice to grant discretionary rate relief, if appropriate, while funding continues. Nevertheless, it is recommended that new applications for rate relief in 2011/2012 be requested in these cases. 3. FINANCIAL IMPLICATIONS 3.1. The estimated amount of mandatory relief for 2011/2012 of £3.7 million is met in full from the Government’s national rating pool. 3.2. The cost to the City Council in 2011/2012 of its share of discretionary relief is £373,137, calculated as follows: 3 Estimated Cost of Discretionary Rate Relief 2010/2011 Total Apportionment of Cost Council Government £ £ % £ % Mandatory/Discretionary 388,674 291,506 75 97,168 25 Rate Relief (Appendix 2) Discretionary Rate Relief 321,670 80,417 25 241,253 75 only (Appendix 2) Community Sports Clubs 1,619 1,214 75 405 25 (Appendix 2) TOTAL 711,963 373,137 338,826 3.3 Budget provision of £410,000 has been included in the revenue estimates for 2011/2012. [DM/15022011/Y] 4. LEGAL IMPLICATIONS 4.1 Under section 47 of the Local Government Finance Act 1988, discretionary power is given to billing authorities to grant partial or full relief to certain categories of non domestic ratepayers. The Non-Domestic Rating (Discretionary Relief) Regulations 1989 allow for this relief to be restricted to a fixed period. 4.2 There are two ways in which Discretionary Rate Relief is granted: 1) to top up mandatory relief already awarded 2) an award of 100% based on various criteria. 4.3 When deciding whether to make an award of rate relief consideration should be given to the fact that the Council must bear a percentage of the cost of relief granted, the remainder being borne by the Non-Domestic Rating Pool. [JH/09022011/R] 5. EQUAL OPPORTUNITIES IMPLICATIONS 5.1 The report has implications for the Council’s Equal Opportunities Policy in that applications for rate relief from charitable and other organisations will include members from disadvantaged groups in the community, such as disabled people, elderly people, young people and ethnic minorities. It is also a requirement that organisations qualifying for discretionary rate relief have membership rules that are non-discriminatory. 6. ENVIRONMENTAL IMPLICATIONS 6.1. This report has no direct environmental implications. 7. SCHEDULE OF BACKGROUND PAPERS 7.1 Wolverhampton City Council Scheme for Discretionary Rate Relief – Appendix 1 Schedules for Mandatory/Discretionary Rate Relief – Appendix 2 4 APPENDIX 1 WOLVERHAMPTON CITY COUNCIL SCHEME FOR DISCRETIONARY RATE RELIEF 1. The following criteria is taken into account when considering applications for discretionary rate relief and each application will be treated on its merits. The criteria set out below are consistent with recommendations of the Department for Communities and Local Government and local authority associations. 1.1. The organisation should ensure that membership is open to all sections of the community and membership rates/subscriptions should not be set at such a high level as to exclude the general community. The club should, if required, be able to demonstrate the criteria by which applications for membership are consistent with the principle of 'open membership' and in accordance with equal opportunities policies. 1.2. Sympathetic consideration will be given to applications from groups who actively encourage membership from particularly disadvantaged groups in the community, e.g. young people or the disabled, elderly people and ethnic minorities. 1.3. Sympathetic consideration will be given to organisations who make their facilities available to people other than members e.g.
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