Back in March I asked questions at the Wolverhampton City Councils Audit & Risk Committee relating to the Non- Domestic Rate appeals, especially with a diminishing grant from the Government to this City Council.
I was very concerned that Members should know two things relating to this issue. Spell out how slow the appeal process was? and how would it affect the Council now and into the future financially?
The Chair agreed with my request and this Monday 4th July the Audit & Risk Committee will be receiving a report which spells out the implications of these delays.
The report I requested is now coming before the Committee on Monday afternoon. The report makes it clear that historically the Council bore none of the risk associated with collecting business rates as a result of appeals. However from April 2013 the rate retention system means the cost of the valuation appeals are now shared equally between the Council & the Government, To mitigate this risk the council must set aside a sum of money that it may be required to repay to the ratepayer if the appeal is successful.
The report will speak of massive 300,000 unresolved challenges across the nation against the 2010 and 2005 rating lists! in England & Wales.
It also tells of a spike in the number of challenges made in March 2015. It also tells of a reduction in pace of the Valuation Office in clearing outstanding appeals.
This is not good news for Wolverhampton.
The City Council receives data from the Valuation Office each month detailing all appeals. also information regarding cases that have been resolved or remain outstanding. This data is used to calculate the potential financial risk to the Council. Now wait for it! During 2015 the Valuation Office received an average of 39 appeals per month in respect of Wolverhampton properties alone, except for March 2015 when they rose to 1,057!
At March 2016 there were 1,514 appeals for Wolverhampton outstanding with the Valuation Office. Gob-stoppingly the average time it takes to process these appeals is one year! or as they inform me 52 weeks….! The appeals lodged for Wolverhampton since April 2013, has been 20%. The appeals lodged in Wolverhampton are comparable with other similar Councils throughout the country!
The report goes on to tell me that the next revaluation is will come into effect in April 2017 and will bring a fresh wave of business rate appeals. Which will increase the financial volatility faced by all Councils?
Already as you read this you may feel that this rotten Government has lost control of the situation. I most certainly feel that is the case. I am already wondering what our MP’s can or should be doing to highlight this issue. Not only the financial consequences for this Authority, but also the system it self that is so clearly at breakdown and is not working. Financial volatility is not want City Council either wants nor should it have to face.
In October 2015 the Government announced that they are proposing a move to 100% rates retention by Councils, at the end of this Parliament. Even that is not strictly true! The consequence of this action is that whilst the City Council will retain all the Business rates that it collects it will under these rules also bear 100% of the costs of any successful appeal. So my fear is that the City will end up paying 100% of the costs on those back dated cases, where under the rules the City and Government share the cost.
The financial consequences of all this change is that Wolverhampton City Council to be prudent, has an appeals provision of a massive £12m which it is now sitting on, which is based on the level of outstanding appeals at the 31st March 2016.
I for one feel that the City is getting short changed on this. I am looking forward to being able to extract more information relating to this situation at the Audit and Risk Committee. I have a gut feeling that the news here in this city around this particular function will be costly. But it is frightening to think that the seven other West Midlands Councils are holding similar sums in reserve. It is a multimillion £ Government scandal in my mind….. A scandal this rotten Government is getting away with because the matter is not under enough public scrutiny. So we will see what is said on Monday!