Deputy Mayor and Executive Member for City Centre Strategy Minutes

Deputy Mayor and Executive Member for City Centre Strategy Minutes

Date:
Monday 30 October 2017
Time:
2:30 p.m.
Place:
Spencer Room, Town Hall, Middlesbrough
 

Attendance Details

Present:
Councillor C M Rooney, Councillor N J Walker(by invitation)
Invitees:
Councillor N Walker
Officers:
S Blood, D Johnson, J Shiel and S Gilmore
Item Number Item/Resolution
PUBLIC
17/1 GROWING THE BUSINESS BASE - INWARD INVESTMENT RATES RELIEF

The Strategic Director, Finance, Governance and Support submitted a report that outlined a proposal for a discretionary business rates support programme designed to incentivise both new businesses either starting up or relocating to Middlesbrough and the expansion of current businesses to larger premises, with a view to expanding Middlesbrough’s National Non-Domestic Rates (NNDR) ‘Business Rates’, collection base.

 

The report stated as Middlesbrough Council works towards relative financial self-sufficiency, it was important that new opportunities were exploited in terms of growing the income base for the Council. The live Investment Prospectus provides a strong foundation for this but additional financial support would be useful in some specific instances where major opportunities slip through the net of mainstream support mechanisms.

 

In offering short-term financial incentives, by way of business rates relief, for select inward investment and incumbent expansion, the Council can realise a long-term financial benefit by ensuring that each business ‘puts in more than it takes out’ in financial support; providing additional economic benefits such as meaningful employment opportunities and supporting the regeneration of the town’s older areas and heritage properties. For a relatively modest investment, the Council will aim to secure additional employment opportunities, new sources of business rates (providing a sustainable income), increased economic output, increased private sector investment in the town and reoccupation of older / heritage / vacant premises; which may provide a catalytic effect in key development areas.

 

 As a mechanism to support the growth of Middlesbrough’s Business Rates (NNDR) base, the Economic Development service had been asked to utilise market intelligence to investigate an appropriate suite of criteria with which to apply a Strategic Business Rates Relief Scheme.

 

Targeted towards projects with development potential, new incumbents to Middlesbrough’s market, step-change developments and the reoccupation of vacant premises (where rates are not currently payable); the scheme aims to incentivise inward investment in key sectors/areas, as a way to generate new business rates and support the delivery of the objects of the Investment Prospectus.

 

In determining the criteria for strategic discretionary rate relief, Middlesbrough Council essentially has two implementation options. That is to (a) provide the support equitably; or, (b) provide the support strategically. By taking a strategic approach, the Council can deploy a package of support targeting businesses, growth sectors and geographic locations; which are particularly fragile, or offer the largest scope for growth (and long term yield to Middlesbrough Council).

 

Broadly, the scheme would incentivise two key areas of investment. The first would allow business rates flexibility for new occupants to Middlesbrough’s market, which bring with them significant inward investment. The second with recognise significant investment and growth for Middlesbrough’s incumbent businesses as they expand into larger premises. The proposed relief will not duplicate existing business rates relief packages such as hardship relief or transitional relief following the 2017 revaluation exercise. Instead, it allows Middlesbrough Council to invest its own resources, on a discretionary basis, in those investment propositions which have a higher propensity to make a significant contribution to employment and long term business rates yields.

 

The report discussed the following, further details of which were outlined in the report:

 

  • Key Assumptions
  • Eligibility
  • Suggested Support Available
  • Applications
  • Approvals, and
  • Scoring Methodology

The report outlined that there were two options available:

 

1. Do nothing

2. Apply a discretionary Inward investment rates relief programme

 

 

ORDERED

 

  1. That the implementation of a discretionary Inward Investment Rates Relief, commencing 1 April 2018, as set out in this report be approved.
  2. That the establishment of an appropriate governance structure to determine applications, monitor impacts and refine criteria as appropriate; as set out in paras 11(q), 13 and 14 be approved.

 

REASONS

 

The decisions were supported by the following reasons:

 

  1. In some strategic instances, where there are strong, demonstrable benefits, the prospect of a ‘soft landing’ in terms of business rates relief may be enough to swing a major investment decision. Offering support in the early period of establishing or expanding gives the business an opportunity to stabilize in its early years and provide a business rates income stream, which may otherwise not have realised.
  2. From 2020, it is understood that the Council is wholly reliant on the Business Rates yield in lieu of any formula grant. As such, any initiative which supports an increase in the business rates base has potentially significant financial benefits for the Council’s revenue position.
     

 


 

The decision will come into force after five working days following the day the decision was published unless the decision becomes subject to the call in procedures.
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