Agenda item

The Committee considered the undernoted report:

 

“1.0  Relevant Background Information

 

1.1    This report provides an update for Members and considers final options for the 2013/14 revenue estimates, in line with the summary of the rate setting process for 2013/14 outlined in figure 1 below.

 

 

2.0    Key Issues

 

2.1    At the meeting of the Strategic Policy and Resources Committee on the 23 November 2012, Members considered two scenarios for the setting of the 2013/14 District Rate. These were:-

 

            Scenario 1 - District Rate increase of 0.86%

 

         A net increase of £1.1m in the revenue estimates based on the estimates prepared by departments and the removal of £2.1m of efficiencies from departmental budgets.

 

         Scenario 2 - District Rate increase of 0%

 

         This report details how this scenario can be achieved.

 

2.2    Scenario 2: Zero District Rate

 

 

         Revenue Estimates

 

         Since the report to Committee in November 2012, the following adjustments to the Revenue Estimates have been made:

 

1.   The council has been advised by the Department of Finance and Personnel on the 5 December 2012 of an increase in the de-rating grant for Belfast amounting to £317,000.

 

2.   The decision of the Strategic Policy and Resources Committee to allocate the waste fund balance to specified reserves has enabled department estimates for 2013/14 to be reduced by £394,000.

 

3.      Further detailed work on future waste costs has also been completed which indicates that the stepped increase in the waste fund contribution could be reduced further by £400,000.

 

         Investment Programme Commitments

 

2.3    Capital Programme

 

         This is used to pay for enhancements to existing council assets or for the provision of new assets owned by the council. The capital programme is financed through an annual budget of £10.14m and this budget is sufficient to meet the £75m spending commitment included in the council’s investment programme.

 

2.4    Belfast Investment Fund

 

         This is used to finance investment package schemes for non-council assets. As part of the rate setting process in 2012/13, the annual contribution to the fund was increased from £3m to £6m to ensure that £20m of Belfast Investment Programme funding is available by 2014/15. There is therefore no requirement to increase the current level of contribution to the Belfast City Investment Fund during 2013/14.

 

2.5    Local Investment Fund

 

         This is used to fund neighbourhood capital projects for non-council assets. The £5m fund has been fully financed and there is therefore no requirement to make additional contributions through the District Rate during 2013/14.

2.6    Reserves

 

         The council’s general reserves position at the year end is forecast to be at least £13.6m by the end of 2012/13. As this is above the minimum requirement of £10m, as set out in the council’s reserve strategy, there is no requirement to include an additional contribution to general reserves in the District Rate for 2013/14.

 

2.7    Rate Base

 

         As advised to the Committee in November 2012, there is ongoing work with LPS to determine the risks and trends associated with the rate base for the city in advance of confirmation of the final Estimated Penny Product (EPP) which will be used for the calculation of the District Rate for 2013/14.

 

2.8    Given the current economic environment, ongoing rates appeals and the level of outstanding debt and write offs, the risk of a decline in the rate base remains high. However, the vacant property work being undertaken by the council’s Building Control service, has proved to be invaluable in mitigating the risk of reduced income by adding around £3m to the collectable rate over the past two years.

 

2.9    Taking into account all of these factors, it is concluded that the rate base of the City is expected to have no growth in 2013/14.

 

2.10  In summary a zero rate for 2013/14 is deliverable in the context of:

 

1.      Meeting the running costs of the organisation.

 

2.      Delivering the financial commitments detailed in the Investment Programme.

 

3.      The Estimated Penny Product (rate base) remaining at the 2012/13 level.

 

4.      Appreciating that any additional capital financing, such as the leisure estate, could only be delivered in the context of future efficiency savings and the realignment of current capital investment programmes.

 

 

3.0    Impact on Ratepayer

 

3.1    A rates bill in Belfast is made up of 55% Regional Rate and 45% District Rate. The Regional Rate, subject to Executive approval, is due to increase by 2.7%. If the council sets a zero rate, this means the ratepayer’s total bill will increase by 1.49%. The table below shows the monetary impact on average property types.

 

PROPERTY		Annual	Weekly
		increase in	increase in
		rates bill	rates bill
Domestic Properties		£
Terrace House		8.86	0.17
3-Bed Semi-Detached House		13.56	0.26
4-Bed Detached House		30.13	0.58
Apartment		8.55	0.16
Average Capital Value		11.79	0.23
Non-Domestic Properties
Office Property		108.14	2.08
Retail Property		87.06	1.67

 

4.0    Recommendations

 

4.1    In order to prepare the rates report for the 11^th January 2013 Strategic Policy and Resources Committee, Members are requested to agree the following:

 

1.      Officers prepare the department cash limits report based on a zero district rate as discussed in Section 2  above;

 

2.      Base rate calculations on zero growth in the Estimated Penny Product as discussed in paragraph 2.9 above”

 

            The Committee adopted the recommendations and agreed that the Director prepare the rates report for the 11th January Committee meeting, based on a zero % district rate and provide a briefing note on possible scenarios to deliver a district rate below zero.