Meeting Pack Derry City and Strabane District Council Dear Member of Governance and Strategic Planning Committee You are hereby summoned to attend the Monthly Meeting of the Governance and Strategic Planning Committee to be held in the Guildhall, Derry, on Tuesday 1 October 2019 at 4.00 pm. Yours faithfully John Kelpie Chief Executive AGENDA 1 Notice and Summons of Meeting 2 Apologies 3 Declarations of Members' Interests Open for Decision 4 Deputation - To receive Professor P Nixon, Vice Chancellor, Ulster University to Update Members on NI HE Funding and Magee Campus; 5 Presentation - To receive Mr A Bronte, Director of Rating Policy, Land and Property Services to discuss the Review of Business Rates (Pages 1 - 30) 6 Chairperson's Business 7 Confirmation of the Open Minutes of the Governance and Strategic Planning Committee held on Tuesday, 3 September 2019 (Pages 31 - 58) 8 Matters Arising 9 EU Exit - Day One Readiness (Pages 59 - 78) Open for Information 10 Central Local Government Political Partnership Forum (Pages 79 - 110) 11 Correspondence from Translink (Pages 111 - 114) Confidential for Decision 12 Confirmation of the Confidential Minutes of the Governance and Strategic Planning Committee held on Tuesday 3 September 2019 (Pages 115 - 116) 13 Voluntary Severance (Pages 117 - 122) 1 October 2019 Page 1 Agenda Item 5 Department of Finance Business Rates Review Page 2 Alan Brontë FRICS, IRRV(Hons), RICS Dip Rating (Hon). Director of Rating Policy Department of Finance Business Rates Review • Background to Review of Business Rates Page 3 • Outcome of July’s Innovation Lab • Details of the Public Consultation Why are rates important for NI? The Context • Rates (domestic & non-domestic) generate £1.334Bn annually • £590m funds District Councils; £744m funds regional public spending Page 4 • Some 77% of District Council income is from rates revenue • Some 6% of Executive spending is from Regional Rates revenue • Between 39% - 51% of each rate bill goes to District Councils High-level breakdown - total rating revenue raised Business Rates Income Domestic Non-Domestic Total Page 5 District Rate £305.5m £284.2m £589.7m Regional Rate £372.3m £371.7m £744.0m Total £677.8m £655.9m £1,333.7m Who Pays? As at 31 March 2019 1% - Filling Stations 1% - Hotels etc (licensed) 1% - Non-Sporting Recreational 2% - Licensed Premises 1% - Defence and Coast Guard 2% - Misc. Public Service Properties 0.5% - Telecommunications 2% - Law and Order Establishments 0.5% - Sporting Recreational 3% - Commercial Unclassified 1% - Other 4% - Hospitals, Clinics, Surgeries, Homes Page 6 4% - Manufactories 30% - Shops, Showrooms, Supermarkets etc 5% - Car Parks 15% - Offices (includes Banks 8% - Schools etc and Post Offices) 11% - Warehouses, Stores, Workshops (non-industrial) Garages 8% - Utilities Who pays? Primary Property Class as at 31 March 2019 Collectable Rates % of Net Collectable Rates Shops, Showrooms, Supermarkets etc £222,590,533 30% Offices (Includes Banks and Post Offices) £111,325,838 15% Warehouses, Stores, Workshops, (Non-Industrial) Garages £83,763,804 11% Utilities £56,208,257 8% Schools etc £55,790,207 8% Car Parks £39,782,168 5% Manufactories £30,201,982 4% Page 7 Hospitals, Clinics, Surgeries, Homes £27,796,864 4% Commercial Unclassified £21,564,344 3% Law and Order Establishments £15,777,166 2% Miscellaneous Public Service Properties £12,977,033 2% Licensed Premises £12,523,768 2% Hotels etc (Licensed) £10,079,079 1% Other £10,684,828 1% Filling Stations £7,830,470 1% Non-Sporting Recreational Facility £7,396,631 1% Defence Hereditaments and Coast Guard £6,181,665 1% Telecommunications £4,146,130 0.50% Sporting Recreational £3,926,881 0.50% Grand Total £733,549,315 100% Who doesn’t pay - Reliefs & Exemptions Residential Homes Sport and Freight and Rate Recreation Transport £9.8m (4.1%) £4.9m (2%) £2.1m (1%) Small Business Rate £19.9m (8.4%) Exempt (eg Page 8 charities) Vacant £96.2m (40.5%) £41.7m (17.5%) Industrial Derating £62.9m (26.5%) Value of each Relief (and shown as a %) Note Agricultural Land and Buildings are not assessed Who doesn’t pay - Reliefs & Exemptions Relief Value Exempt (e.g. churches & charities) £96.2m Industrial De-rating £62.9m Non-Domestic Vacant Rating £41.7m Page 9 Small Business Rate Relief (includes enhanced Post Office relief) £19.9m Residential Homes Rate Relief £9.8m Sport & Recreation Relief (includes Community Amateur Sports Clubs) £4.9m Freight & Transport Relief £2.1m Total Value £237.5m What FSB, NIRC and Retail NI say….. “Rates are a disproportionate burden on smaller businesses and restrict their ability to invest, grow and create jobs. A significantlyRoger higher Pollen proportion FSB of small businesses in GB are exempt Page 10 from rates compared to … NI” “…retail is 12% of the economy and pays a quarter of all business rates is simply not sustainable…” Aodhán Connolly NI Retail Consortium “...First on the list for Retail NI is fundamental change to our broken and antiquated system of business rates. It is a scandal that Northern Ireland has the highest business rates in the UK, which is a huge burden on our members and our colleagues in the hospitality sector. It is very welcome that the Department of Finance has already begun a comprehensive review of rating policy with a view to providing options for an incoming Finance Minister.....” Glyn Roberts RetailNI 27.08.19 Rates Review Announced Why a Review of Business Rates? • Announced 9 May by Permanent Secretary Sue Gray. • Recognises changes in high streets and town centres. Page 11 • Business Rates need to fund public services while allowing businesses in all sectors to successfully trade and enable economic growth. • Ready with updated proposals for incoming Ministers. • Reflect learning in future Regional Rate setting? Business Rates Review What Review aims to do:- • To explore proposals that result, overall, in similar levels of revenue. Page 12 • Explore the possibilities of widening the tax base and lowering the rate poundages. • Not seeking to abolish business rates. • Examine alternative taxation options to compliment or partly replace. • Consider how business rates aligns with PfG. Business Rates Review What Review aims to do:- • Consider equity within the rating system & ability to pay. Page 13 • Examine UK ‘Making Tax Digital’ policy proposals. • Examine how business rates operates in relation to domestic rates. • Examine local revenue policies and practices nationally & internationally. Business Rates Review Review Timetable: key dates Page 14 • 2 & 3 July – joint workshop on town centre and city centre regeneration • August to November: Stakeholder events across NI • 16 September – 11 November: 8 weeks of Public Consultation • November 2019 – January 2020: Consider Consultation Responses • Spring 2020: Publish Consultation Report Business Rates Review Innovation Lab The challenge question was: Page 15 ‘How can we make town and city centres places where people want to live, work, visit and do business in?’ The aim - to seek to find ways to enhance town and city centres across NI. The task - to consider the challenge question and identify a set of high- level recommendations. Innovation Lab Lab Generated Questions - • How can we make sustainable / active transport the modes of choice? Page 16 • How can we redesign the city centre for people not traffic, supporting walking and cycling that works for everyone? • How can we make better use of existing financial vehicles or models to encourage development and growth. What are the barriers and can they be overcome? • How can we incentivise the reuse of our existing built environment especially our built heritage? Innovation Lab Lab Generated Questions - • How can we attract the necessary skills for the 21st Century? Page 17 • How can we develop civic leadership – shared and sectoral? • How do we plan and develop safe and confident city centre living for all (subvention, accessible, adaptable)? • How do we create a sense of community (safe / confident / engaged)? • How do we obtain the funding to provide and maintain the necessary services (infrastructure, services / open spaces) facilities and infrastructure needed? Innovation Lab Lab Generated Questions - Page 18 • How do we reform the tax system to ensure we have sufficient revenue to pay for public services and the tax burden is fair? • How do we reduce the individual rates burden without decreasing the level of funding that rates provides? Innovation Lab Lab Generated Questions - • How do we reform the tax system to ensure we have sufficient Page 19 revenue to pay for public services and the tax burden is fair? • How do we reduce the individual rates burden without decreasing the level of funding that rates provides? Lab Recommendations Rates related Recommendations • Review exemptions and reliefs. • Introduce online shopping tax and a mobile phone tax (devolve powers to NI). Page 20 • Expand rates base to include all aspects. • Sharing of data across government and local government. • Investigate differential rating between domestic and non-domestic. • Perform a full impact assessment on Local Property Tax / Land Value Tax. • ‘Rates Rethink’ revisited. • Set objective to reduce rate poundage / rate burden by 30%. • Carry out a study on the introduction of user charges. Page 21 • Consultation opened Monday 16 September. Page 22 • Six Strategic questions and Terms of Reference published on web. • 8 week period closes on Monday 11 November. What do we want to know? 1. How can revenues from district and regional rates be raised in a way that is fair and equitable and without placing an unacceptable burden Page 23 on business ratepayers? 2. What ways can be found to widen the tax base that could facilitate a lower level of business rates? 3. How can a fair distribution between district rates and regional rates be sustained? What do we want to know? 4. How can a fair distribution between non-domestic and domestic rates be sustained? Page 24 5.
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