A ‘war chest’ of £4m could be needed to defend Rother from businesses appealing their taxes.
Rother District Council (RDC) officers are concerned about the prospect of having to pay out millions in business rates revaluation appeals despite running a £1.3m surplus for 2015/16.
Early estimates reckon the amount needed in reserve for a ‘significant number’ of appeals is between £3m and £4m, according to RDC’s revenue budget outturn 2015/16.
“The volatility of business rate income remains a major concern and the council will need to ensure it maintains a level of reserves that deal with this,” the report to cabinet said.
“In particular, the impact of the 2017 business rate revaluation is at this stage unknown.
“What is clear from previous revaluations is that there will be a significant number and value of rating appeals.
“A very early estimate is that a reserve of £3m to £4m may be required.”
At a cabinet meeting on Monday, lead member for finance Lord Ampthill said the appeals issue must be carefully watched.
“We still have to find an enormous sum in the forthcoming three or four years so it may look as if we’re in clover with £1.9m of apparent surplus at the moment, there are very good reasons for it all,” he said.
“I was interested myself to see that interest earnings for the year were considerately more than budgeted for which is a great skill as interest rates have been next to nothing in that period.
“Clearly this retained business rates item is something that will have to be watched very carefully given the volatility in the area and in the unknown appeals provision necessity.”
RDC’s provision for rating appeals currently outstanding stands at £668,000 following the settlement of a significant number of appeals by the Valuation Office Agency, according to the report.
The volatility of business rates and the dangers of the appeals is made worse by RDC’s need to save £3m by 2019/20, due to cuts to central government support.
The surplus RDC managed in the last financial year will help towards that saving and council leader Carl Maynard praised the staff for running a tight ship.
“It was quite clear, we know that local government was hit hard, much harder than other areas of government, by the austerity programme, and we know that that process has not yet finished,” he said at Monday’s cabinet meeting.
“And I think that’s the key message. We continue to manage our finances prudently, we are certainly not out of the woods yet.”
The council’s coffers were also helped by the £265,000 sell-off of some of its assets, including Camber Fields, outside Rye, at auction in May.
The total sum is more than twice as much as RDC expected to make from the sale and has been deposited into its Capital Receipts Fund which can only give money to ‘revenue-generating’ assets.
One of the biggest outlays for the local authority this year will be spent trying to halt the coastal erosion at Fairlight.
More than £2.3m is allocated for the Fairlight Coastal Protection Scheme with £1.87m to be spent on a rock bund.
The vast majority of the scheme is funded by Westminster, £2.168m including a £450,000 contingency provision, but Fairlight Parish Council and Fairlight Prevention Fund provided £150,000.
‘Potential future schemes’ for the district include the development of three employment sites and a new leisure centre and swimming pool, according to the report.
The leisure centre scheme is a major project for RDC in its approved corporate plan and £190,000 was designated to support it.
In relation to the employment space, the report said: “Officers are working on options to secure the delivery of employment space on a number of sites in Rother which will contribute to meeting business need and local plan growth targets.
“Members will be aware that new commercial floor space is in short supply within Rother and once the detailed proposals are formulated a report will be presented.”
Gillian Johnson asked about Bexhill allotments at the meeting on Monday, which cost £12,000 and was budgeted for nothing. Officers said all but four allotments had been sold, and the others will be transferred to an allotment association or community group.
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