Innovation and Local Authorities, am I reading right?
Call me an old cynic but I don’t tend to see the words “innovation” and “local authorities” put in the same sentence too often.
However, credit where it’s due; with no end in sight to spending cuts to local government, LAs are facing a rather uncertain future despite the promise of autonomy when it comes to keeping their business rates revenue.
If innovation is needed anywhere it’s within LAs where other funding options are being sliced to the bone and future financing needs to generate as much certain income as possible in order to protect key services.
Business rates raise over £22bn a year for LAs and are often seen as a barometer of economic health in the league table of regional prosperity. For many LAs, reliance on business rates has been increasing but, paradoxically, with the backlog of appeals against business rates, their future forecasts have never looked shakier.
Most agree that the current business rates system suffers several key issues – including the lack of predictability and reliability of income and the amount of relief schemes in play. In some areas there’s too much reliability on a small number of larger ratepayers, which means a single delay or issue could have significant impact on receipts – think Meadowhall Shopping Centre for Sheffield or the Metro Centre for Newcastle.
Going forward, the clearest message coming from LAs is the need for closer collaboration with the Valuation Office Agency (VOA). Higher quality data sharing with the VOA is seen as crucial to opening up better forecasting opportunities and revenue tracking.
Some LAs such as Southwark have called in the dreaded management consultants. But in this case the adoption of new approaches does seem to have improved their business rate collection, so I have read.
One idea is to use a multi-channel communications approach on business rates: text messages, email and even social media are used to prompt quicker responses and payments.
Others are exploring or reviewing tenancy trends to target repeat offenders and allow resources to be directed more effectively. Specific recovery approaches for SMEs are also considered a good way to ensure that rate collection worked without damaging any SME economy.
It is encouraging to see LAs exploring technology and other schemes to improve their business rate revenue and I hope that continues long after any review of the overall system is announced by Whitehall. It may take some time for the benefits to trickle through but to steal a line: “every little helps”.
This week saw business rates rise again, with the multiplier increasing to 50.4p in the pound – a hit many companies could do without.
It is looking like the Scottish Government is to follow in English footsteps by making business rate revaluations more frequent.
The appeals centered on two business rates avoidance schemes where the properties were vacant and liable for unoccupied rates.