Business Rates for the Town Council Options

[Simon Kirby]

At Monday's NTC committee meeting the council resolved to ask central government for some of the business rates collected from the town's businesss.

“What I am proposing is that central government forgoes a very small amount of the locally collected business rates that it retains, and passes that amount to us.

“For example, one third of one percent of the total business rates collected in West Berkshire would be just over £277,000. A pittance in the context of the £83.2 million that is collected overall, or the £66.3 million that the government keeps for itself.

“But if distributed among the town and parish councils in West Berkshire on the basis of the tax base, for example, that could mean an additional £54,000 a year going to Newbury Town Council to support the work we do providing and subsidising services for Newbury’s businesses. Yet the impact on the government’s finances would be unnoticeable.”

The National Association of Local Councils (NALC) and the Society of Local Council Clerks (SLCC) have voiced their support, but last summer the Department for Communities and Local Government (DCLG) responded to approaches from the NALC by saying that there were no plans to change the way that parish and town councils were funded.

Mr Swift-Hook added that a number of other town councils have been pressing for this change.

The Town Council is funded entirely from a precept on the domestic tax payer, so if the town council does indeed provide any service to the town's business then it has no business doing so.

But does it? This is what the town council provides: Cemeteries, market, allotments, war memorial, clock house, footway lighting, park benches, grit bins, hristmas lights, parks, open space, recreation grounds, floral displays, flood defences, grants, wbc toilets, neighbourhood wardens, civic duties, direct committee expenditure, admin, town hall, young people's council, election expenses.

Of that lot the only item that is a service to the town's businesses is the Christmas lights which is largely a promotional event for the retail businesses and is organised by the BID and funded largely by the town council, £22k this year.

If central government were to give town and parish councils 0.33% of the business rates to spend business interests, then what exactly are they to spend it on? Our own town council is notoriously inefficient and unaccountable so an extra £54k is just going to disappear in administration busy work. If there is to be some extra money made available for the town's businesses than I would suggest the BID is the best placed organisation to spend it as it is already accountable to its businesses and it understands its businesses needs. Of course I would imagine that the town's business would simply choose not to be taxed quite so much, but you'd really need to ask them.

But if central government are going to give the town and parish councils 0.33% of business rates to spend on business interests then central government will need to tax us poor schmos more to make good the difference, because it's not like free money, it has to come from somewhere. So why do I end up paying for the town council's busy work on the pretext of some unspecified commercial interest?

[user23]

Is the money from Business Rates spent solely on businesses?

[Simon Kirby]

Is the money from Business Rates spent solely on businesses?

Impossible to say really. With the town council it's easy to argue that their services should serve the domestic tax payer only because the town council only receives income from the domestic tax payer, but with central and primary local government they both receive income from both domestic and commercial tax-payers and have a duty to provide services to both, so it becomes difficult to say how much of the business rates gets spent on what as it isn't ring-fenced. It's also impossible to separate some of the central and primary local government functions into domestic or commercial because things like national defence and local transport serve both.

A tax on businesses is in any event always a tax on domestic consumers in the end, because the tax simply adds to the cost of any product or service until eventually the domestic consumer picks it up. Taxing the domestic consumer to provide services for commerce is an Ouroboros, with the parasitic state taking a sup each time round.

[user23]

Impossible to say really.

The answer is no.

[Simon Kirby]

The answer is no.

You'd need to detail the costs of each service, national and local, to justify that. But even assuming you're right, I don't see how that changes anything. Taxes on commerce are simply passed on as costs to the domestic consumer, so in the end it's always the domestic consumer who pays, so taxing the domestic consumer to support commerce is an unnecessary complication.

If the town council wants to provide service to the business community that it's my understanding of the Localism Act that they can do that, and they are already free to raise the precept to fund those services, so it's weasel economics to try and get the money circuitously from central government when it could just come directly to us already.

The only debate here is what services does the council want to provide, and why? If business interests have a need for a service they have both the BID and WBC to turn to as both already have a remit to support them. If businesses are tapping up the town council because they're a soft touch and the domestic tax-payer will never notice then I think someone needs to make a fuss.

[Ruwan Uduwerage-...]

Dear Forum Members,

In my discussions with independent retailers in Victoria Ward, which covers the Town Centre I regularly hear how they feel that more could be done to assist in making Newbury a more viable place for shopping.

Naturally things such as the parking charges are seen as too expensive, and compared with other places this I feel is correct. Only this morning I was in Hungerford where I paid 90 pence for two hours of parking, and yesterday I was in Henley where again the parking charges were substantially lower than Newbury.

We have parts of the Town (North and South of the bollards in Northbrook Street) that feel that they are forgotten, and this is very apparent in Cheap Street where businesses are fast closing up or significantly downsizing.

A portion of the business rates could be used to further assist these vitally important businesses with expanding the work that the BID already undertakes, but is limited by resources as well as finances. It perhaps needs to be remembered that the proposal will not actually cost either the businesses not WBC, but merely means recouping a fraction of what the Government retains.

Further to this, it should be noted that Newbury Town Council's area of interest is beyond that of the BID, which covers only the Town Centre area, and some further funding could potentially assist retail outlets in other parts of the town.

I doubt that some will agree with my stance, but although I am a liberal, I believe that central assistance is needed at times to stimulate and support economies. Others will disagree with this stance, and again I throw out the gauntlet and ask the Forum members to get far more actively involved in the decision making of the Council by getting themselves elected onto the Council opt otherwise positively engaged in Working Groups, etc.

I would appreciate hearing both arguments for and against this proposal.

Ruwan Uduwerage-Perera
Newbury Town Council - Councillor for Victoria Ward & Deputy Leader

[On the edge]

Ironically, I'd also agree that some stimulation / pump priming us necessary. The national economy almost collapsed and was recusitated by doing just that to the banks. Things like subsidised rents to attract more specialist local traders etc. However, the caution I'd add is that we have no body locally with the qualification or competence to manage this.

[Simon Kirby]

Naturally things such as the parking charges are seen as too expensive, and compared with other places this I feel is correct. Only this morning I was in Hungerford where I paid 90 pence for two hours of parking, and yesterday I was in Henley where again the parking charges were substantially lower than Newbury.

Yes, I couldn't agree more. I visited both Witney and Abingdon recently, and both have free parking, and that really makes a tremendous difference to whether I want to visit somewhere or not. Maybe it shouldn't, but it does. I would like to see parking free for a couple of hours anywhere in town, and I accept that the money WBC would forego would need to come from somewhere else.

I don't really see where the Town Council comes into this though, unless perhaps it was to cut down on some of its waste and pass the savings over to WBC to pay for the parking shortfall. It could for example save £56k by dropping the civic duties, or £39k that it gives away in grants, or £28k that it spends on the Christmas lights that by rights the BID should be picking up, or £25k it spends on the moribund charter market, and of course the old chestnut, the £40k it spends running its allotment service itself, and it could certainly find cheaper office accommodation than the £87k annual cost for the town hall, and if it can't find some savings in the £192k of "administration" after making all of those other services then it really isn't looking hard enough.

A portion of the business rates could be used to further assist these vitally important businesses with expanding the work that the BID already undertakes, but is limited by resources as well as finances. It perhaps needs to be remembered that the proposal will not actually cost either the businesses not WBC, but merely means recouping a fraction of what the Government retains.

Agreed, neither the businesses nor WBC will pay a penny more for the extra services that NTC wants to provide to its business friends, but central government will need to fill that shortfall left by the gift of 0.33% of the business rates, and that means taxing us poor schmos more. It's all very well JSH calling that a pittance, but it's our pittance.

[Andy Capp]

Agreed, neither the businesses nor WBC will pay a penny more for the extra services that NTC wants to provide to its business friends, but central government will need to fill that shortfall left by the gift of 0.33% of the business rates, and that means taxing us poor schmos more. It's all very well JSH calling that a pittance, but it's our pittance.

If the money was used to grow business activity in town, then it might be that the tax on the transactions would fill the gap? Although as it stands I have no confidence that Newbury Town Council know how to budget or spend wisely.

[Ruwan Uduwerage-...]

Simon,

Although we may agree on much on this issue we are not going to agree. I am a supporter in Franklin D. Roosevelt 'New Deal' approach to economic stimulation as times of economic downturn, and as a small government supporter you are not.

I see that it is the role of Local as well as District Councils to assist in keeping the economy of our Town as vibrant as it can be, for this ultimately benefits the residents as a whole.

Come and join us in the Chamber and we can have this debate.

Ruwan Uduwerage-Perera
Newbury Town Council - Councillor for Victoria Ward & Deputy Leader

[blackdog]

£54k would not go very far in reducing parking charges - I can't see what NTC would actually do with it?

Of course it would be nice if all local business rates stayed in the district - it would save us paying council tax.

[Biker1]

Naturally things such as the parking charges are seen as too expensive, and compared with other places this I feel is correct. Only this morning I was in Hungerford where I paid 90 pence for two hours of parking, and yesterday I was in Henley where again the parking charges were substantially lower than Newbury.
Ruwan Uduwerage-Perera
Newbury Town Council - Councillor for Victoria Ward & Deputy Leader

And there's the rub.
It costs nothing to park at retail parks on in one's drive when shopping on line.
Only if you visit the Town Centre!

[motormad]

£54k would not go very far in reducing parking charges - I can't see what NTC would actually do with it?

Of course it would be nice if all local business rates stayed in the district - it would save us paying council tax.

Spend it on electric charging points...?

[blackdog]

Business rates have hit the national news - Independent

The idea is to abolish them, not share them with parish councils!

It's an interesting idea - to replace business rates with a sales tax. This would remove one of the big differences between online and bricks & mortar retailing.

[Cognosco]

If the money was used to grow business activity in town, then it might be that the tax on the transactions would fill the gap? Although as it stands I have no confidence that Newbury Town Council know how to budget or spend wisely.

I thought the BID was supposed to take over all this talk of growing business activity in the town?
All this money that is proposed to be spent to assist retailers in the town, including the gift of £9000 for power points, just boggles the mind?
I have heard a complaint that there were some stalls in Northbrook Street and one of those was Sky this person walked down Northbrook Street and was accosted both times by the Sky rep and was held up both times taking time to explain he was not interested? The Sky stall had it's own generator running to power it. Is part of this £9000 going to be spent to enable Sky and other type of these chuggers to hold a stall in Northbrook street?
What about the vast majority of people who find it too costly already to shop in Newbury and solely use the internet, even for grocery, or retail parks to do their shopping why should their tax money be spent on subsidising town businesses? If people want to shop in Newbury then retailers should be able to survive without subsidy if not it a case of use it lose it.

[Simon Kirby]

Although we may agree on much on this issue we are not going to agree. I am a supporter in Franklin D. Roosevelt 'New Deal' approach to economic stimulation as times of economic downturn, and as a small government supporter you are not.

I see that it is the role of Local as well as District Councils to assist in keeping the economy of our Town as vibrant as it can be, for this ultimately benefits the residents as a whole.

I agree with you pretty much entirely on outcome, I'm just not convinced that Big State interventionism is the right strategy. I would like to see the town's business interests decide for themselves that inward investment was the best strategy. I'm not entirely confident that they would make the best collective choice, and I'm familiar enough with game theory to understand that intervention is sometimes necessary, especially to prevent a tragedy of the commons which this kind of is.

On the practical side I'm not convinced that the town council is at present capable of spending that extra money efficiently and effectively. My instinct would be to give it to the BID, though I hear what you say about the areas of town that aren't served by the BID, but my preferred solution would then be to enable them with a BID of their own or expand the present BID to include them. I have a lot of time for the BID as it appear to me to be professionally run and to know it's game, and I can't yet say the same for the town council - though we both share the self-same aim of making that a reality, so I'm with you more than you might suppose.

Come and join us in the Chamber and we can have this debate.

If Newbury would elect me then I would like to give it a go. I would like to think that I could maintain my credibility long enough to do some good.

[Simon Kirby]

Ironically, I'd also agree that some stimulation / pump priming us necessary. The national economy almost collapsed and was recusitated by doing just that to the banks. Things like subsidised rents to attract more specialist local traders etc. However, the caution I'd add is that we have no body locally with the qualification or competence to manage this.

I think this is a dangerous fallacy - keep the faith OtE! I ask myself, what would Adam Smith do?

Paying the business a support grant to go towards the rent will just allows rents to inflate because market economics determines how much of its own money a business can spend on rent and any grant will just go straight into the pocket of the property owner. Rent control would prevent that, but that has its dangers too because again market forces are not free to set the true cost of the rent.

If local businesses can't compete then they deserve to fail.

[Ruwan Uduwerage-...]

If Newbury would elect me then I would like to give it a go. I would like to think that I could maintain my credibility long enough to do some good.

Simon,

Personally I believe that yourself and other members of the Forum would make excellent Councillors. The reality is that it is easier to change systems from within.

Ruwan Uduwerage-Perera
Newbury Town Council - Councillor for Victoria Ward & Deputy Leader

[Cognosco]

Simon,

Personally I believe that yourself and other members of the Forum would make excellent Councillors. The reality is that it is easier to change systems from within.

Ruwan Uduwerage-Perera
Newbury Town Council - Councillor for Victoria Ward & Deputy Leader

Would an Elected Councillor be able to table a motion to do away with the Town Council?

[On the edge]

I think this is a dangerous fallacy - keep the faith OtE! I ask myself, what would Adam Smith do?

Paying the business a support grant to go towards the rent will just allows rents to inflate because market economics determines how much of its own money a business can spend on rent and any grant will just go straight into the pocket of the property owner. Rent control would prevent that, but that has its dangers too because again market forces are not free to set the true cost of the rent.

If local businesses can't compete then they deserve to fail.

Yes, that's right! Only caveat to that would be my feelings as a small trader paying my business rates being evicted from my town centre premises, so the Council can give the property away for a nominal sum to an out of district landlord.