Government faces calls to intervene over NHS business rates claim
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Photo: Andy G, Flickr
Government has been urged to intervene to prevent a claim by NHS trusts for business rates relief racking up major costs to the public sector.
Last week, Room151 revealed that local government faces a bill running into hundreds of millions of pounds after more than 100 trusts demanded business rates relief backdated for six years.
And this week, the Department of Local Government and Communities (DCLG) told one authority that it would not be issuing any advice on the issue.
In an email to the council seen by Room151, department officials said: “We are fully aware of this issue but, as you will appreciate, it is for local government to decide applications based on the facts of each case and we have no current plans to issue any guidance.”
However, it added that it understood that the Institute of Revenues Rating and Valuation “is advising authorities to refrain from granting mandatory relief at the current time”.
A spokesman for the Chartered Institute for Public Finance and Accountancy called on government to provide a coordinated response to the relief claims.
He said: “NHS trusts and local authorities are public bodies and so there is bound to be a public interest question if large sums are spent by both sides on valuation and legal experts.
“Really a whole of government approach is needed from the Department of Health, DCLG and HM Treasury if we are to avoid the scenario of winners and losers.”
A DCLG spokesman told Room151: “It is for local authorities to decide whether any ratepayer meets the criteria for business rates relief.”
The claim by trusts also left councils scratching their heads on how to treat it in their NNDR1 forms, due this week, in which they have to estimate business rates income for next year.
Lee Geraghty, consultancy manager at local government consultancy LG Futures, said: “Based on discussions with our local authority clients, it is evident there has been a great deal of uncertainty regarding the application for mandatory relief by NHS trusts.
“This uncertainty relates to the basis of the request, its potential impact on resources, and, more immediately, if and how it should be reflected in the forecast business rates income figures within 2016/17 NNDR1 form.”
The deadline for the return of NNDR1 forms is 31 January, with the department telling councils last year that it is important that the deadline is adhered to “as we need to ensure the data are validated and passed on quickly to the team within DCLG that arrange the schedules of payments between yourself and the department”.
However, one council told Room151 that it only received guidance from the DCLG on how to deal with the NHS trusts claim late this week.
In an email, officials said: “Decisions on the completion of the NNDR1 form is also a matter for individual local authorities. Our view is that if an authority has already made a decision to give relief they should include it in their NNDR1 (in Part 2 under mandatory relief) but If they haven’t made that decision because they are still considering their position, they should not include it. However such decisions are for individual authorities.”
The spokesperson said CIPFA is in discussion with DCLG about the broader implications of rate retention.
He added: “Local government will need to understand the resilience of its funding base after rate retention is implemented, especially when a class of concerned claims at national level materially affects collection.
“Be they NHS trusts, retailers or power stations, rate payers will at times act to reduce their tax liability, resulting in local government losing income used to fund services such as social care.”
Photo: Andy G, Flickr
