COUNCIL leaders in Malvern have agreed to pull out of a county-wide business rates agreement, saying it posed an ‘unacceptable’ risk to the authority’s finances.
Members of Malvern Hills District Council’s executive committee voted to leave the Worcestershire Business Rates Pool (WBRP) from April 1 next year at a meeting on Tuesday, October 27.
The move has come after a change to the way business rates are calculated, which meant the council had to pay £1.2million and £160,000 a year ongoing back to GP surgeries.
Figures also revealed if the authority remained in the pool during 2016/17 it could lose up to £212,000.
Coun Paul Cumming, portfolio holder for finance on Malvern Hills District Council (MHDC), said: “We’re disappointed we have had to make this decision but remaining in the pool poses an unacceptable level of risk to our finances at a time when we are already facing cuts to our government funding.
“We will keep this decision under review and as Business Rates income improves over the next few years hopefully we will be in a position to rejoin the pool at a later date.”
Four of Worcestershire’s six district councils and the county council agreed to form a Business Rates Pool in April 2013 in a bid to keep a portion of the business rates the authorities collected locally.
The Government set a minimum amount of money councils could expect to receive each year, which was about £1.6million for MHDC.
A system is also in place, meaning if the council’s share of business rates falls below a certain level, the Government will top it up to about £1.5million, but the ‘safety net’ payment is not available to MHDC while it remains in the WBRP.
In the last two years the WBRP has been able to make up the shortfall, but the recent decision to recalculate the amount purpose built GP surgeries pay in business rates is understood to have had a huge impact.
Following the ruling a number of GP surgeries made successful appeals to the Valuation Office Agency against the value given to their property in 2005 and 2010, which has led MHDC to pay back more than a £1million.
Other councils across Worcestershire have also been affected and as a result the WBRP does not have the money to cover any future losses.
A spokesman for Worcestershire County Council spokesperson said they respected the decision to leave the pool and insisted Malvern Hills District Council remained a valued partner.
