Lancaster City Council opts out of county business rates cash bid

Heysham Power Station
Heysham Power Station

Lancaster City Council has said Heysham power stations are the reason why it opted out of a countywide scheme which could see Lancashire keep more of the money it collects in business rates.

Lancashire County Council, 14 district councils and the unitary authorities in Blackpool and Blackburn with Darwen, have jointly bid for a pilot scheme to retain 75 per cent of the revenue generated by the tax.   

Currently, Lancashire’s local authorities keep half of the business rates they collect, while the government redistributes the remainder across the country.

But Lancaster last week became the only council in the region not to sign up to the new arrangements, which will come into force in April 2019.   

The scheme requires all of the county’s authorities to pool their rates – but Lancaster says that being home to Heysham nuclear power stations meant that it was at risk of losing out.

“The reason Lancaster is not in the pilot is because of our particular circumstances in terms of our business rate income risk,” Coun Anne Whitehead, cabinet member for finance, explained.

“This specifically relates to the power stations and the potential for high-value appeals and loss of income from unplanned outages.  In simple terms, under the proposed pooling arrangement, the majority of any significant income losses – should they occur – would be borne in the main by Lancaster, which would not be financially viable.”

The government has removed a so-called “no detriment” clause for next year’s pilot, ending a guarantee that councils would be no worse off than under their previous arrangements.

Lancashire has instead designed its own scheme, which allocates five percent of the pooled money to cover potential losses from successful appeals by businesses for rate rebates.

Lancaster’s decision means it will instead still be covered by the government’s previous guarantee – but will continue to retain only half of the rates collected in its area.   

The 75 per cent scheme is expected to be rolled out across the country in 2020 following next year’s pilot scheme.