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Business Rates Retention Pilot

Gloucestershire County Council is one of ten pilot areas within the country that will be able to keep 100 per cent of the business rates it raises.

The council entered into a pooling agreement with all six district councils in the county in 2013/14. The reason for this was to retain a larger proportion of additional business rate income within the county, as a result of paying a lower levy on growth, above the baseline, to central government to support council services and economic growth.

In the first year of operation the Pool reported a surplus, however in 2014/15 the Pool suffered a loss due to the impact of backdated appeals on rateable values and, in particular, the successful backdated appeal by Virgin Media, the largest valued business in Tewkesbury. Learning from this, by mutual agreement Tewksbury left the pool and an improved position has been reported since, with the Pool once again in a surplus.

In September the Department for Communities and Local Government (DCLG) published an invitation to Local Authorities in England to pilot 100% Business Rates Retention in 2018/19 and to pioneer new pooling and tier-split models. This means that Local Authorities would keep all business rates collected locally.

With a successful Business Rates Pool in operation, and Gloucestershire fitting the criteria of a rural two-tier system of local government, the council and six district councils undertook extensive modelling work, supported by an external consultant, which reviewed the risks and benefits and resulted in Leadership Gloucestershire supporting the bid to the DCLG.

Gloucestershire’s bid has been successful, and indications announced at the time were that this is worth an additional £9.2m to Gloucestershire as a whole.

The bid is based on

  • 20 per cent to an already established and effective Strategic Economic Development Fund (set up under existing pool arrangements and managed by the Gloucestershire Economic Growth Joint Committee comprising all seven Gloucestershire councils and the GFirst Local Enterprise Partnership).
  • 30 per cent to the six district councils for financial resilience (stability and sustainability) and growth initiatives specific to their individual areas.
  • 50 per cent to the county council for financial resilience (stability and sustainability) and growth initiatives.

This gives the county council an estimated one off funding of potentially £4.6 million. The council agreed this money will be invested as follows at its February budget setting meeting:

  • £2.6 million for children’s social care
  • £1 million for adult social care
  • £0.53 million for the Highways Local Scheme
  • £0.47 million for electric vehicle infrastructure

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