Report of the Deputy Chief Executive and City Treasurer.

This report advises on the methodology of calculating the City Council's council tax base and business rates income for budget setting purposes for 2023/24, along with the timing of related payments and the decision on business rates pool membership.

The committee considered a report of the Deputy Chief Executive and City Treasurer which outlined the methodology of calculating the City Council's council tax base and business rates income for budget setting purposes for 2023/24. The report also explained the timing of related payments and the decision on business rates pool membership.

Key points and themes within the report included:

• The calculation of the council tax base is the number of dwellings within the Council’s boundary presented as ‘Band D equivalent’. Dwellings outside Band D are converted into a proportionate Band D value and individual band bills are calculated in the ratios proportionate to Band D;
• The number of properties is adjusted to take account of discounts and exemptions for disabled occupants, single occupiers, students, exempt dwellings and reductions in accordance with the council tax support scheme and non-collection of council tax;
• The fluctuating numbers of students and the transient population in Manchester make it difficult to predict how many properties will be exempt, empty or occupied by a single person;
• Manchester has been part of the Greater Manchester business rates retention pilot since 2017/18 which means that 99% of yield will be retained by the Council and 1% paid to the Greater Manchester Combined Authority;
• The starting point for the calculation of the business rates base is the estimate of gross business rates payable by business ratepayers in 2023/24 and is adjusted by the forecast cost of mandatory and discretionary reliefs;
• The Council is required to estimate any business rates surplus or deficit on their Collection Fund for the relevant year and any such estimated surplus or deficit is shared between the billing authority and the Greater Manchester Combined Authority;
• An application was submitted to Government for the ten Greater Manchester authorities to form a Business Rates Pool in 2023/24 and each authority will need approval, through its respective governance arrangements, with a final decision on whether to participate in the 2023/24 Pool required within 28 days of the Provisional Local Government Finance Settlement, which is expected in late December; and
• Payment dates for the share of council tax payable to the Greater Manchester Combined Authority must be agreed and notified before 31 January 2023. The payment dates are proposed as the 20th of each month for 2023/24; and
• How the Council approaches Council Tax debt recovery.

In introducing the item, the Chair thanked officers for providing additional information regarding the Council’s procedure for debt recovery, which was included as an addendum to the report.

The key points and queries that arose from the committee’s discussions included:

·         Commending the Council for a reduction in using enforcement agents to recover debts, and querying what more could be done to reduce this;

·         The Council’s procedure for dealing with complaints made against Enforcement Agents;

·         Noting that the recovery process would stop if a resident contacted the Council and made and kept to an arrangement for payment;

·         The need to recognise those facing mental health issues and how this impacts their ability to deal with financial difficulties and debts;

·         Whether any information sharing was in place with partners to gain a clearer understanding of the personal circumstances of those who owed money;

·         Noting that there was an increase of c.8000 Band D equivalent properties for 2022/23, and how many more were anticipated for 2023/24;

·         How the Council’s membership in a business rates pool with other Greater Manchester authorities would be advantageous; and

·         Whether the Council would be required to pay central government if there was a decline in business rates growth in Manchester.

The Deputy Chief Executive and City Treasurer explained that decisions around the estimated council tax surplus or deficit for 2022/23; the 2023/24 council tax base; the estimated business rates surplus or deficit for 2022/23; the 2023/24 business rates income; the Council’s membership in the business rate pool with other Greater Manchester local authorities; and the dates of precept payments to the Greater Manchester Combined Authority would be taken as Key Decisions by the Deputy Chief Executive and City Treasurer, in consultation with the Executive Member for Finance and Resources, and that the Chair of the Resources and Governance Scrutiny Committee would be requested to waive these decisions from the call-in procedure.

She also explained that the Council’s business rates position was particularly complex for 2023/24 due to the pending re-evaluation and the Council tax position was increasingly volatile due to the need to ascertain correct estimates for student exemptions and new properties.

In response to a question around what more could be done to reduce the use of Enforcement Agents in collecting money owed, the Head of Corporate Revenues advised that over the last 10 years, the Council had utilised all information they had to contact and engage with residents who owed money to come to a mutually sustainable solution. The Council was also identifying companies who encourage residents through text messages and automated phone calls to engage with the Council. This had been trialled in other areas and had a good response rate.

He also informed members of a HMRC trial, which provided the Council with information on residents’ employer and earnings and further encouraged them to contact the Council. Staff were currently making contact with those residents earning over £40,000 pa.

Officers had been instructed to take account of cost-of-living pressures when making sustainable arrangements, recognising the pressure on resident's finances.

The Head of Corporate Revenues advised that all Enforcement Agents wear body cameras with audio and visual recording functionality, and this could be utilised in response to a complaint. He explained that work was undertaken several years ago to examine the number of complaints against Enforcement Agents, and this was low, with around 5 complaints per company per year. He also provided an example where the Council had requested that a particular Enforcement Agent did not work in Manchester due to a complaint around conduct.

Members were also informed of criteria within the Enforcement Agents’ Code of Practice, such as mental health issues and recent bereavement, which required Agents to desist from visiting a resident who may be suffering or dealing with personal issues. All enforcement companies had Vulnerability Teams, who would assume responsibility for collecting money owed in a sensitive manner. The Council would also take any mitigating information around mental health or personal circumstances into account before passing details over to Enforcement Agents and would make further efforts to engage with residents prior to this.

A GDPR issue was acknowledged in response to a question around information sharing with partners, but the Revenues team had provided training previously to the Adult Social Care officers on council tax, to enable staff in the community to understand the payment process and encourage residents to pay. The Head of Revenues, Benefits and Customer Services explained that his service was looking at how best to link with the cost-of-living advice service which offered pathways to advice and support related to benefits, help with rent, debt and food poverty and worked in conjunction with Citizens Advice Manchester to provide holistic support to residents and acknowledge the wider issues as to why a resident may be in council tax arrears.

The Deputy Chief Executive and City Treasurer explained, in response to a question from the Chair, that future forecasts of Band D equivalent properties were aligned with information from the Council’s housing department on proposed new developments, but this is not an exact figure as properties are not formally recognised until assessed by the Valuation Office.

The Deputy Chief Treasurer advised that a 2% increase in the tax base was assumed for 2023/24 and would provide a figure as to how many properties this equated to following the meeting.

It was stated that the Greater Manchester business rates pool would be advantageous for Manchester City Council if the pool was not a part of the 100% business rates growth pilot as this would enable the Council to retain its entire business rates income. Membership of the 50% business rates growth pilot would mean that grant funding would be provided to 9 of 10 Greater Manchester authorities, including Manchester City Council, with Trafford Council having to pay a tariff to central government and would be disadvantageous to the Greater Manchester economy.

The Deputy City Treasurer advised that there was a baseline of 97% for business rates growth, under which the government would compensate a local authority. He assured the committee that the business rates growth in Manchester was above 97% as a result of cumulated growth.

In summarising the item, the Executive Member for Finance and Resources reiterated that the use of Enforcement Agents in collecting debts was a last resort, that residents had a minimum of 12 opportunities to engage with the Council regarding their payments and that those on the Council Tax Support Scheme would not be referred to Enforcement Agents. He also highlighted that low income was not always the reason why a person may not pay council tax. However, he stated that council tax formed a substantial part of the revenue budget and was needed to provide essential and basic services.

Decision:

That the Committee

1.    notes that the Deputy Chief Executive and City Treasurer, in consultation with the Executive Member for Finance and Resources, has delegated powers to:

•      agree the estimated council tax surplus or deficit for 2022/23;

•      set the 2023/24 council tax base for tax setting purposes in accordance with the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2013;

•      agree the estimated business rates surplus or deficit for 2022/23;

•      calculate the 2023/24 business rates income for budget setting purposes in accordance with the Non-Domestic Rating (Rates Retention) Regulations;

•      determine whether the Council should be part of a business rate pooling arrangements with other Greater Manchester local authorities in 2023/24;

•      set the dates of precept payments to the Greater Manchester Combined Authority.

2.    notes that the Chair of the Resources and Governance Scrutiny Committee will be requested to exempt various key decisions from the call-in procedure; and

3.    recommends that the Council’s partner agencies be provided with training on Council Tax to provide a collaborative holistic approach to residents requiring support.