Budget Strategy 2013-14 PDF 220 KB - London Borough of Barking ...

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3.2.2 The Council must put in place a new Council Tax Support Scheme by 31 st January 2013 and it will no longer merely recover its costs from Government but instead will receive a fixed grant, equal to 90% of the previous years spend. LBBD currently receives £15.776m in subsidy (excluding the GLA), but the new grant will only be £13.789m – a pressure of £1.897 million, almost 12%. This also acts to reduce the Council Tax base by £13.789m. 3.2.3 The Council’s council tax and housing benefit administration grant has been reduced by Central Government by £104k in 2013/14. The administration grant is currently £2.0m but CLG announced in November that it will be cut to £1.9m. 3.3 Business Rates Retention Scheme 3.3.1 Business rates are currently collected locally and paid over to central government before being redistributed nationally to local authorities based on a needs formula grant. As from 1 st April 2013, the business rate system will be localised, meaning we will not merely be collecting money on behalf on the Government. Instead there will be a direct link between how much the Authority collects in rates and its own income. 3.3.2 Local authorities will be allocated a business rate income base-line using historic billing levels and collection performance. Authorities will be able to keep a portion of any income generated in excess of this and conversely will have to bear any loss in income below this as well (up to its safety net). Therefore authorities will have the risk and reward of new business within their control, and the incentive to provide conditions where businesses can start up and flourish. Thus a real incentive for local economic development has been localised from Central Government to local authorities. The business rates taxation system will not be changed, only the way in which tax revenues are distributed, therefore there will not be any impact on the amounts an individual business would pay. Rate setting powers would remain under the control of central government and the revaluation process would be unchanged. 3.3.3 There will be a central and local share to the business rates collected above the baseline level, as well as a GLA element. The NNDR collected will first be split 50 / 50 with the DCLG, and the Borough’s 50%, will then further be split 60 / 40 with the GLA, thus leaving the Council with an overall 30% of the total amount. This means that any growth or losses will also be shared in the same proportions (i.e. for every £100 lost or gained, £50 goes to the DCLG, we keep £30, and £20 goes to the GLA). 3.4 Universal Credit 3.4.1 Universal credit is a new single payment for people that are looking for work or who are on a low income. It is a combination of all the separate current social security benefits: job seekers allowance, employment and support allowance, income support, tax credits, and housing benefit, but excluding Council Tax benefit. Claimants will receive just one monthly payment, which paid directly to their bank account in the same way as monthly salary. 3.4.2 One significant issue for LBBD is that this includes support for housing costs. Currently Housing Benefit is paid from the DWP and is paid to the Authority. Any benefits that are still due to claimants and then paid net of their rent, therefore there
are not cash collection issues. However under universal credit the payments will go direct to the claimants, who in turn will be responsible for paying the authority as the landlord. Therefore the Authority will now be collecting money from current housing benefit claimants for the first time and will need to consider the impact on collection rates and provision for bad debt. This could be a significant pressure for the HRA on housing rent and the General Fund on temporary accommodation income. 3.4.3 The reforms also includes introducing a £500 per week cap on housing benefit, which could see a movement of claimants from inner London, i.e. from more expensive properties that exceed the cap, outwards towards LBBD. 3.5 Community Infrastructure Levy (CIL) 3.5.1 The CIL is a new charge which local authorities are empowered, but not required, to levy on most types of new development in their areas. It will largely replace current Section 106 (S106) agreements with developers S106 will still continue to exist but to a much lesser extent and only in very specific areas. The CIL is charged in respect of the net additional floor space for all development within the Borough, excluding affordable housing. There are a range of set charges according to the type of development (including retail, leisure, health and education), which will reflect the desirability for each type, and ensure that desired new development is not deterred. This year the Authority has been consulting on its proposed charges, which have been agreed by Cabinet, and it is anticipated that the schemes will be implemented from the 1 st April 2013 though the Government may still delay the introduction. Unlike S106, CIL will not be negotiated on a development by development basis, which will make the process easier and more transparent. The CIL is also more flexible in terms of use whereas S106 receipts often had very strict contractual conditions over their use, CIL instead will just be added to the Councils overall funding for capital infrastructure. 3.5.2 In addition, from the 1 st April 2012 the Council has been collecting a mayoral CIL, which is collected and passed on to the Mayor of London. We have been required to charge developers a standard rate of £20 per square metre of new development (the lowest of three bands across London). The Mayoral CIL was specifically set up to fund the Crossrail project, and once Crossrail is completed (by c2019), the charges will cease, at which time we could stop charging developers or subsume the charge into our own charges. 3.6 Community Right to Buy 3.6.1 The Localism Act 2011 contained provisions for assets whose main use furthers the social wellbeing or social interests of the local community (assets of community value). The provision relates to public and private assets and could be village shops, pubs, community centres, libraries and allotments. 3.6.2 The provisions give local groups a right to nominate a building or land for listing by the Council as an asset of community value. When a listed asset is to be sold, local community groups will in many cases have a fairer chance to make a bid to buy it on the open market. Local groups will be given 6 months in which to prepare their offer before the asset is allowed to be sold. However it is entirely down to the seller as to whom they sell their asset to.
Page 1 and 2: Title: Budget Strategy 2013/14 Repo
Page 3 and 4: 1.3 In preparation of the CSR 2010,
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Page 11 and 12: 3.16 Estate Renewal 3.16.1 LBBD has
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Page 15 and 16: Pension Fund actuarial review (4.6.
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Budget Strategy 2013-14 PDF 220 KB - London Borough of Barking ...

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