COVID-19 National Non Domestic Rates Reliefs for 2021/22
Members considered a report of Councillor Joyce Plummer, Portfolio Holder for Resources, on the National Non Domestic Rates Nursery Discount Scheme for 2021/22 and the new Nursery Discount Scheme, both for the period of 1st July 2021 to 31st March 2022
Councillor Plummer highlighted the key features of the report and the four schemes indicated which underpinned the Government’s previous and on-going support for leisure, hospitality and childcare businesses. The funding could amount to around £2M for local business funded by the Government.
The report stated that, in its response to the Coronavirus (COVID-19) pandemic, the Government had announced a raft of measures to support business rates payers – deliverable via billing authorities using their existing discretionary powers under Section 47 of the Local Government Finance Act 1988.
Government had supported billing authorities and their preceptors by funding, in full, the discretionary reliefs awarded under these measures using grants delivered under Section 31 of the Local Government Act 2003.
The administration of all discount schemes within this report was subject to restrictions laid out in Section 47 of the Local Government Finance Act 1988 which stipulated that any variation or termination of a discount scheme under Section 47 that would result in an increased financial liability for the ratepayer must be done at the end of a financial year and with 12 months’ notice. By extending the 2020/21 schemes and implementing new schemes from 1st July 2021, the Council’s administration of business rates relief remained within the legal boundaries of its discretionary powers.
Expanded Retail Discount Scheme 2021/22 Scheme
Since 2019/20 the Government had provided a Business Rates Retail Discount for retail properties which for 2020/21 it expanded to include the leisure and hospitality sectors. On 3 March 2021 the Government confirmed that the Expanded Retail Discount would continue to apply in 2021/22 at 100% for three months, from 1 April 2021 to 30 June 2021.
For 2021/22, the Expanded Retail Discount would be applied after mandatory reliefs and other discretionary reliefs funded by grants made under section 31 of the Local Government Act 2003 had been applied. Other locally applied discounts under section 47 of the Local Government Finance Act 1988 would have to be applied after the Expanded Retail Discount.
Expanded Retail Discount awards were made under section 47 of the Local Government Finance Act 1988, as amended.
For the extended 2020/21 scheme, a total of 311 businesses were set to benefit from 1st April to 30th June 2021 with a total of £1.1M in business rates relief awarded. For the new 2021/22 scheme, fewer businesses were due to accept the relief due to cash caps and some national chains had requested relief to 30th June 2021 only. The Council’s current estimate of relief to be paid under the 2021/22 scheme was £2.1M.
The Retail Discount Scheme provided by the Council, in line with guidance and funding provided via MHCLG had been updated to reflect changes made to policy on a national scale. The main differences in the schemes were outlined in a table set out in the report.
Nursery Discount Scheme
In response to the Coronavirus, in the Budget on 18th March 2020, the Government had announced that all Early Years Foundation Stage childcare providers, registered with Ofsted and liable for business rates in 2020/21 would be given a 100% business rates discount for 2020/21.
At the Budget on 3 March 2021, the Chancellor had announced that the Nursery Discount would continue to apply at 100% for eligible properties for the first three months of 2021 from 1 April 2021 to 30 June 2021.
In total, 12 Early Years Foundation Stage childcare providers were set to benefit from the 2020/21 scheme extension with a total of £17,000 being awarded from 1st April to 30th June 2021. The same 12 childcare providers were due to benefit from the new 2021/22 scheme with £33,000 in rate relief due to be awarded.
For both scheme extensions, as this was a measure for 2021/22 only, the Government was not changing the legislation relating to the reliefs available to properties. Instead the Government would reimburse local authorities that used their discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended), to grant relief.
2021/22 Expanded Retail Relief and Nursery Discount Schemes
In its guidance to local authorities issued in March 2021, the Government had outlined future funding for both an Expanded Retail Discount Scheme and Nursery Discount Scheme to run from 1st July 2021 to 31st March 2022. For both schemes, business rates relief would be capped at 66% of the business rates liability (subject to cash caps) for 1st July 2021 to 31st March 2022, at which point the schemes would close.
For both 2021/22 schemes, ratepayers would be given the right to refuse the discount.
For the Expanded Retail Relief 2022/21, a ratepayer could only receive relief up to the following cash caps, ignoring any relief for the period before 1 July 2021:
a. £2 million for ratepayers meeting the eligibility for the ‘closed cash cap test’; this test identified those businesses whose main in-person services were mandated to close based on law and guidance applicable on 5th Januarys 2021, further compensating those businesses that might have faced a steeper financial impact as a result of national and local restrictions. Or,
b. £105,000 for all other ratepayers not subject to mandatory closures as outlined above.
For the Nursery Discount Scheme 2021/22, a cash cap of £105,000 per business was applicable, across all of their hereditaments.
State Aid/Subsidy Control
Whilst EU State Aid rules no longer applied within the UK following the end of the transition period on 31 December 2020, the UK still had several international obligations relating to subsidies. These included those arising from the UK’s continued membership of the World Trade Organisation, or from the UK-EU Trade and Cooperation Agreement. The Government considered that relief awarded under the schemes in this report was not a subsidy that fell foul of the new subsidy control principles. This meant that local authorities could lawfully award relief to all eligible properties up to the caps specified in the guidance.
Councillor Addison noted that animal boarding establishments had claimed that they were not being supported, but business had largely dried up because families were not taking holidays abroad. The situation had been brought to her attention by a cattery in her ward. Boarding establishments were also essential for older people who needed to make arrangements for their pets when they were admitted to hospital. The sector’s professional association had raised the issue with Speaker of the House of Commons, Sir Lindsay Hoyle MP. Some local authorities were providing grant support, but others were not. Councillor Addison asked if this matter could be looked at in Hyndburn.
Councillor Plummer and the Leader if the Council were both aware of the issue and a commitment had been given to look into this matter with a view to providing discretionary funding.
Resolved (1) That the Expanded National Non Domestic Retail Discount Scheme 2020/21 and the Nursery Discount Scheme 2020/21 attached to the report, be extended for the first three months of 2021/22 financial year.
(2) That the Expanded National Non Domestic Rates Retail Discount Scheme 2021/22 and the Nursery Discount Scheme 2021/22 attached to the report, be approved and applied to business rates bills as soon as is reasonably practicable in order to provide businesses with certainty around their business rates liabilities for 2021/22.
(3) That the Deputy Chief Executive be given delegated powers to undertake the calculation, collection, administration and recovery of National Non Domestic Rates in accordance with the Local Government Finance Act 1988, (as amended from time to time) and further government regulations that may be issued pursuant to the same.