Federation of Small Businesses calling for a change in the system and a reduction in the increases. 2.5 The issue is significant in the North East as

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1 Page: 1 Business Services REPORT TO ABERDEENSHIRE COUNCIL - 9 MARCH 2017 BUSINESS RATES RELIEF SCHEME 1. Recommendations It is recommended that the Council:- 1.1 Agree to the proposed Business Rates Relief Scheme as set out in section 4 at an estimated cost of 2,792, Agree to support Aberdeenshire businesses in line with the North East Regional Economic Strategy with the balance of enabling funding. 1.3 Delegate authority to the Head of Finance following consultation with Co-Leaders and the Leader of the Opposition to implement the proposed Business Rates Relief Scheme once final figures are available. 2. Background/ Discussion 2.1 Business Rates is administered and collected by Local Authorities within Scotland, it is governed by legislation set by the Scottish Government including setting the poundage rates, whereas the Rateable Values are set by the Assessor. The Rateable Value and the poundage rates are then used by Local Authorities to calculate Business Rates liabilities including any relevant exemptions and reliefs. 2.2 On the 9 February 2017 at the meeting of Full Council the Revenue Budget was discussed and agreed. Part of the discussion included the consideration of new information from the Scottish Government regarding an announcement of additional funding. Council agreed to allocate up to 3 million in enabling money and that a detailed scheme for supporting businesses which considered and took full account of the impact of the business rate revaluation in Aberdeenshire be prepared for today s meeting. 2.3 Since the Council meeting in February a further announcement on Business Rates has been made by the Scottish Government on 21 February 2017 by introducing a new national and a new local relief scheme which will cap bill increases in 2017/18 at 12.5% for specific business sectors namely: hotels, pubs, restaurants, cafes and offices. 2.4 Provisional Rateable Values are now available to Aberdeenshire businesses. Of the 11,000 business rates payers over 1,000 have received notice of Rateable Value increases that in many cases will mean increase in business rates, some of these significant. For the past month there has been a campaign backed by the local press, the Chamber of Commerce and the

2 Federation of Small Businesses calling for a change in the system and a reduction in the increases. 2.5 The issue is significant in the North East as the Rateable Value was based at April 2015 when the local economy was extremely buoyant. Not only have those businesses in the energy sector suffered a downturn since 2015 but also hospitality, retail and many other sectors. The Council has endorsed the North East Regional Economic Strategy which supports Investment in Infrastructure, Innovation, Inclusive Economic Growth and Internationalisation which benefit from a stable cost base for these aims to be realised. 2.6 The Community Empowerment (Scotland) Act 2015 was introduced giving new discretionary powers to Local Authorities. Part of the Act refers to schemes for the reduction and remission of non-domestic rates. A rating authority can now create schemes to reduce Business Rates leviable by it in respect of lands and heritages. Before exercising this power the rating authority must have regard to the authority s expenditure and income and the interests of persons liable to pay council tax set by the authority. Any reduction or remission scheme introduced ceases to have effect at such time as may be determined by the rating authority. 2.7 Aberdeenshire Council will continue to work with the business sector, exploring options for the provision of support. This will range from signposting to other agencies who may be able to assist i.e. Scottish Enterprise and Business Gateway and in some cases considering financial assistance. There are various loans that may be facilitated by the Council, LEADER funding and Scottish Government funds for specific industries. There are several strands of support that can be offered, dialogue with businesses key to pinpointing the best solution in each circumstance. As issues become apparent it may be that a sectoral approach would be of merit and engagement with both the Grampian Chamber of Commerce and Federation of Small Businesses. 2.8 New rateable Values will be applied from 1 April Rate payers may appeal against their revaluation within 6 months of the date of issue of the Valuation Notice or the 30 September 2017, whichever is later. The last date for the disposal of appeals from the 2017 revaluation is 31 December 2020 (Valuation Timetable (Scotland) Order 1995/164 as amended by the Valuation Timetable (Scotland) Amendment order 2015/ Section 9 of the Local Government (Scotland) Act 1975 states that rates must be paid until the determination of the appeal. Therefore, the need for immediate relief may be required by some rate-payers. It is foreseeable that if there is a high volume of appeals, decisions from the Valuation Appeals Committee may be delayed, and may takes years rather than months to conclude. 3. State Aid Page: State Aid is financial assistance, given by the public sector to an undertaking (i.e. an entity which is engaged in economic activity where there is a market in comparable goods or services) on a discretionary basis, which has the potential to distort competition and affect trade between Member States of the European Union. Economic activity means offering goods and/or services

3 on a given market and which could, at least in principle, be carried out by a private operator for remuneration in order to make profits. A company, partnership, sole trader or even a charity could be an undertaking for state aid purposes. 3.2 In the event that the rules on state aid apply a recipient of financial assistance is usually permitted to receive up to a maximum of 200,000 (or less depending on the sector in which the business operates) over a 3 year fiscal period (de minimis aid). The ceiling includes all public assistance given as de minimis aid during that period. 3.3 Businesses in receipt of assistance through the proposed scheme are required to disclose all sources of public assistance received over the current and two preceding fiscal years if they believe that the rules on state aid limits apply. 3.4 Whilst it is not foreseen that any business rates relief awarded under this scheme will breach the financial limit, the scheme is designed so that businesses must determine eligibility in order to retain relief as proposed. 4. Proposed Relief Scheme Page: The Council was provided with a draft valuation roll from the Assessor giving the current and provisional rateable values for all properties within Aberdeenshire, with a summary of the number of businesses in Appendix 1. This draft data has been used to analyse the entries to identify the range of increases being proposed but equally identify those cases with no increases, zero rateable values or a reduction in their rateable values. 4.2 Until final rateable values are set by the Assessor (subject to any appeal) and input into Council s own Business Rates system, the information used in the design of a relief scheme is subject to change. When the final data is made available it will be possible to set specific parameters for relief and discount and identify multiple ownership information for example. 4.3 With regards to a proposed scheme, the following criteria is being considered in order to determine businesses eligible for relief, where relief is a reduction in the provisional increase in Business Rates. The following properties will not be included: Properties with a Rateable Value (RV) = zero Properties where the RV has reduced or not increased Properties whose RV is less than 15,000 as they already qualify for 100% relief Properties whose RV is above 120,000 Properties who are included in the national relief scheme: Hotels, Pubs, Restaurants, Cafes Properties who are included in the local relief scheme: offices Public Sector properties Properties likely to be exempt due to other reliefs e.g. Churches Properties relating to Renewable Energy due to existing reliefs

4 4.4 With this criteria in place for one year only, the remaining properties have a combined increase in their RV of some million, subject to the detail outlined in paragraph In addition, all businesses as stated earlier, are entitled to appeal their Rateable Value. In the event the applicant is successful in their appeal the revised rateable value will be backdated to 1 April 2017, any relief granted under the proposed scheme will be cancelled unless they still qualify for further relief, if that is the case the relief will be based on the revised rateable value. 4.6 There will be further areas to consider as circumstances change for example: Any proposed relief through reduction will cease to have effect on a change in the occupation of the lands and heritages of which it was granted. The extension of the Empty Property Relief scheme is also being considered as a package of measures. At present 86 properties are identified as eligible for a top up to existing relief. Where relief has already been awarded under the current scheme, this will remain. Any further local relief that is agreed will be applied, in addition to the existing relief, up to a maximum of the local relief rate. A similar approach is proposed for any additional local relief applied to the Small Business Bonus Scheme whereby a business already in receipt of 25% discount may then receive a maximum of a further 25% relief on a bill increase. Specific business sectors may require additional support outwith a Business Rates Relief Scheme and this should be in line with existing economic strategies. A summary of existing assistance available is set out in Appendix If the proposed relief scheme is agreed, the resultant information would be included within the business rate bills and therefore avoid the need for businesses to apply for relief. The Rateable Value Notifications will be issued on 15 March 2017, with information provided to the Council by this date. Business Rate bills will be issued as soon after 15 March 2017 as practical. 5. Scheme of Governance 5.1 The Council is able to consider and take a decision on this item in terms of Section A.8.1 or 8.2 of the List of Committee Powers in part 2A of the Scheme of Governance as it relates to the approval of annual estimates. 5.2 The Head of Legal & Governance has been consulted as part of the preparation of this report and her comments are included. 6. Equalities, Financial & Staffing Implications Page: Equalities. An Equality Impact Assessment has been carried out as part of the development of the proposed Business Rates Relief scheme as detailed in Appendix It is recognised that the potential impacts on protected groups could be positive, negative or indeed neutral depending on the extent of relief and impact this scheme may have. However existing policies will continue to be applied to ensure that all debts due to the Council are dealt with in a

5 Page: 5 consistent, effective and efficient manner and that all customers are treated fairly with consideration being given to individual circumstances 6.3 The Council has set aside up to 3 million for enabling money. The following options and costs to mitigate Business Rates bills on 1,209 identified properties and economic development support are: Provisional Figures Provisional Increase in RV 11,147,465 Estimated Increase in Bill 5,179,490 50% relief on increase in bill 2,589,970 Extension of Empty Property Relief 105,532 Top up of 25% on increase in liability to SBBS cases 15,000 to 18,000 96,538 Total estimated relief 2,792,040 Available for economic development support 207,960 Enabling Money 3,000, There is an expected increase on the number of queries from businesses, as well as the work required to input information to the Business rate system in order to issue bills within the expected timeframe, however this will be contained and managed within existing resources. 6.5 A communications strategy is being developed to clearly convey the relief scheme, economic development support and existing information relating to all aspects of Business Rates. Ritchie Johnson Director of Business Services Report prepared by Alan Wood, Head of Finance

6 Appendix 1 Page: 6 Summary of Aberdeenshire Businesses by category No. of Businesses Proposed Local Relief Scheme 1,209 RV < 15, % SBBS 5,443 RV = Zero 1,083 No Increase in RV 1,045 Reduction in RV 933 RV > 15,000 < 18,000 Standard 25% SBBS 188 RV Increase is <12.5% 1,015 RV > 120, National Relief Scheme (Hospitality: Hotels, Pubs, Restaurants, Cafes) 150 Local Relief Scheme (Offices) 159 All Public Sector premises 131 All subjects likely to be exempt from other relief: eg Church exemption 53 All Windfarms, Wind Turbines etc 96 Number of Businesses 11,722 RV = Rateable Value

7 Appendix 2 Page: 7 Assistance Available to Aberdeenshire Businesses Advice and Support Depending on the growth and export aspirations of businesses there are different levels of consultancy and advice available with sign-posting to sources of financial support. The Council, Business Gateway and Scottish Enterprise collaborate to direct businesses to the most suitable support and advice. The Council also offers procurement training to help businesses win contracts from the public sector and large businesses. Opportunity North East now offers support and advice to certain sectors. The Council also supports projects to help specific Aberdeenshire industries. The City Region Deal will offer infrastructure and other support to north east industries. Grant Support Aberdeenshire Council offers grants through the Support for Aberdeenshire Business Scheme that will support development by businesses bringing additionality to the Aberdeenshire economy. Scottish Enterprise has many grants dependant on the sector and activity of a business. Following the Scottish Government strategy there is emphasis on innovation and export support. There are many sources of support for energy-saving and waste reduction projects from both governments. The Scottish Government offers large Marketing and Processing Grants which Aberdeenshire businesses, including fish processors, have been able to access to part finance capital projects. LEADER EU funding, administered by the Council, is available for small and medium sized businesses as well as community organisations. There are certain local retail schemes run by the Council such as the Formartine Retail Improvement and Enhancement Scheme or those financed through the Regeneration Strategy. Regional Selective Assistance is available to assist with capital developments which are creating, or in some instances are safeguarding, jobs. Hardship Relief A local authority may award up to 100% relief if the applicant would otherwise sustain hardship, and if doing so was reasonable in light of the interests of Council taxpayers. The ratepayer would have to apply for Hardship Relief and provide the required financial evidence. The cost of hardship relief is funded 75% by the Scottish Government and 25% by the awarding Council.

8 Appendix 2 Page: 8 Loan Support in Aberdeenshire from non-private sources Source Amount Rate Eligibility Prince s Trust Up to 7,500 6% and unemployed Start Up Loan Company supported by UK Government Up to 25,00 per owner 6% Pre start or trading <2yrs Scottish Microfinance supported by Scottish Government Up to 25,000 6% <10 employees Support for Aberdeenshire Business Scheme Aberdeenshire Council Business Loans Scotland Aberdeenshire Council and EU funding 5,000 to 25,000 25,000* to 100, % Additionality and viability 6% No local displacement Scottish Enterprise 250k to 5m Can be a mix of equity/debt Case by case but expect 1m+ turnover

9 Appendix 3 Page: 9 EQUALITY IMPACT ASSESSMENT Stage 1: Title and aims of the activity ( activity is an umbrella term covering policies, procedures, guidance and decisions). Service Business Services Section Finance - Revenues Title of the activity etc. Business Rates Relief Scheme Aims of the activity This EIA concerns the proposed Business Rates Relief Scheme which was approved at the meeting of the Full Council on 9 February The Council agreed to allocate up to 3 million in enabling money and that a detailed scheme for supporting businesses in need, which considered and took full account of the business rate revaluation in Aberdeenshire, be prepared. Author(s) & Title(s) Alan Wood St Stage 2: List the evidence that has been used in this assessment. Internal data (customer satisfaction surveys; equality monitoring data; customer complaints). The Revenues Team Plan includes a range of performance measures, which enable managers to monitor both quantitative and qualitative performance. Customer satisfaction levels are monitored on a regular basis, including the level of satisfaction with the delivery of the revenues service. Internal consultation with staff and other services affected. Consultation with members of the Revenues team, Finance Management Team and consultation with senior leadership team and members. External consultation (partner organisations, community groups, and councils. Consultation has taken place with local Assessors, Scottish Government and local businesses in the preparation of the proposed relief scheme.

10 Appendix 3 Page: 10 External data (census, available statistics). Data was provided from the Assessors as part of the analysis to arrive at the proposed scheme as detailed in the report. Other (general information as appropriate). A communications strategy is being developed to clearly convey the relief scheme, economic development support and existing information relating to all aspects of Business rates. Stage 3: Evidence Gaps. Are there any gaps in the information you currently hold? No Stage 4: Measures to fill the evidence gaps. What measures will be taken to fill the information gaps before the activity is implemented? These should be included in the action plan at the back of this form. Measures: Timescale: Stage 5: Are there potential impacts on protected groups? Please complete for each protected group by inserting yes in the applicable box/boxes below. Age Younger Yes Yes Positive Negative Neutral Unknown Age Older Yes Yes Disability Yes Yes Race (includes Gypsy Travellers) Religion or Belief Yes Yes

11 Appendix 3 Page: 11 Gender male/female Yes Yes Pregnancy and maternity Sexual orientation (includes Lesbian/ Gay/Bisexual) Gender reassignment (includes Transgender) Marriage and Civil Partnership Yes Yes Yes Yes Stage 6: What are the positive and negative impacts? Impacts. Please detail the potential positive and/or negative impacts on those with protected characteristics you have highlighted above. Detail the impacts and describe those affected. Positive (describe the impact for each of the protected characteristics affected) Age, Disability and Gender if rates relief is received by a business this will potentially have a positive impact on business continuity and employment. Negative (describe the impact for each of the protected characteristics affected) Age, Disability and Gender - if rates relief is not received by a business this will potentially have a negative impact on business continuity and employment. Stage 7: Have any of the affected groups been consulted? If yes, please give details of how this was done and what the results were. If no, how have you ensured that you can make an informed decision about mitigating steps? A communications strategy is being developed to clearly convey the relief scheme, economic development support and existing information relating to all aspects of Business rates.

12 Appendix 3 Page: 12 Stage 8: What mitigating steps will be taken to remove or reduce negative impacts? These should be included in any action plan at the back of this form. Mitigating Steps Refer to Stage 7 Timescale Stage 9: What steps can be taken to promote good relations between various groups? These should be included in the action plan. Refer to Stage 7. Stage 10: How does the policy/activity create opportunities for advancing equality of opportunity? The budget will continue to support the Revenues Team in the development of systems, processes and corporate debt policy ensuring that all debts due to the Council are dealt with in a consistent, effective and efficient manner and that all customers are treated fairly with consideration being given to individual circumstances providing a holistic approach to service delivery. Stage 11: What equality monitoring arrangements will be put in place? These should be included in any action plan (for example customer satisfaction questionnaires). Equality considerations will be considered as part of the development of the Revenues Team Plan. Stage 12: What is the outcome of the Assessment? 1 No negative impacts have been identified please explain. Please complete the appropriate box/boxes 2 Negative Impacts have been identified, these can be mitigated - please explain. * Please fill in Stage 13 if this option is chosen.

13 Appendix 3 Page: 13 As referred to in stage 7 a communications strategy is being developed to clearly convey the relief scheme, economic development support and existing information relating to all aspects of Business rates. 3 The activity will have negative impacts which cannot be mitigated fully please explain. * Please fill in Stage 13 if this option is chosen * Stage 13: Set out the justification that the activity can and should go ahead despite the negative impact. The Business Rates Relief Scheme is being implemented to help mitigate the potential negative impact on local businesses of a change in policies by both Scottish Government and the local Assessors. Stage 14: Sign off and authorisation. 1) Service and Team 2) Title of Policy/Activity Business Services, Finance, Revenues Business Rates Relief Scheme Name: Alan Wood Name: Sign off and authorisation. 3) Authors: I/We have completed the equality impact assessment for this policy/ activity. 4) Consultation with Service Manager Position: Head of Finance Date: 02/03/17 Signature: Name: Chris Smith Position: Principal Accountant Date: 02/03/17 Signature: Name: Date: Position: Date: Signature: Name: Position: Date: Signature: 5) Authorisation by Director or Head of Service Name: Alan Wood Position: Head of Finance Date: 02/03/17 Name: Position: Date:

14 Appendix 3 Page: 14 6) If the EIA relates to a matter that has to go before a Committee, Committee report author sends the Committee Report and this form, and any supporting assessment documents, to the Officers responsible for monitoring and the Committee Officer of the relevant Committee. e.g. Social Work and Housing Committee. Date: 7) EIA author sends a copy of the finalised form to: eia@abdnshire Date: (Equalities team to complete) Has the completed form been published on the website? YES/NO Date:

15 Action Start Complete Lead Officer Expected Outcome Resource Implications Page: 15 Appendix 3 Action Plan

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