Changes to the payment process of schools’ business rates

The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross party membership organisation, representing councils from England and Wales.

Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.

We welcome the opportunity to comment on the proposed new system for the payment of schools’ business rates. This response has been cleared by lead members of the LGA’s Resources and Children and Young Peoples’ Boards.

The LGA has been involved, together with others from the sector, in a working party convened by DfE/ESFA.  There is agreement that the proposals in the consultation are workable, subject to a New Burdens Assessment.

Q1. Do you agree that the direct payment of schools’ NNDR via ESFA to billing authorities is preferrable to the current system?

We agree that the current system for the payment of schools’ business rates could be rationalised, although something like the proposed system is currently used in some unitary authorities for maintained schools.  We also note that the proposed system would not alter the liability for business rates and also that it will still be part of school funding formulae and will have to be accounted for as part of schools’ accounts.

Q2. Do you anticipate any new burdens as a result of the proposals? Alternatively, would the proposals result in savings for local authorities and schools?

Although we welcome this question, DfE/EFSA need to conduct a full New Burdens exercise with a representative sample of local authorities, both those where billing and education functions are in the same authority and also those in two tier areas. This should also cover any cash flow effects arising from the change.  We also note that the consultation recommends that billing authorities should continue to send bills to maintained schools and academies so there would be no savings resulting from not having to do this.

Q3. We are anticipating that billing authorities would provide one upload of bill data to ESFA for all the schools within their borough/district. Is this the best way to collect rates information from billing authorities, and what information would billing authorities need in order to provide the required upload of bill data?

This issue has been discussed within the working group referred to above and the view amongst technical experts is that billing authorities should be enabled to upload all schools’ data in bulk and that any validation thresholds should take account of regular revaluations.

Q4. Where multiple billing systems exist within local authorities, what issues would this proposal raise?

Local authorities use a number of software providers; we would expect this proposal to be fully tested with the main systems to check on compatibility with the DfE/ESFA system in order to automate the process as much as possible.

Q5. In local authorities where discretionary relief is provided, how could this best be taken forward under the new system?

Discretionary relief is a decision of the billing authority. The new system should not alter the current arrangements. Bills will be net of reliefs, mandatory or discretionary.

Q6. Are there any issues of detail that would need to be resolved in order to implement this proposal? One that occurs to us is how to handle schools occupying sites that also have other bodies on site, such as a children’s centre.

It will depend on whether other bodies are part of the same hereditament or are split. In the latter case it should not cause any problems as the other bodies would not be affected by this proposal. In the former case it would depend on whether the school was expected to cover the cost of the other body or if it was recouped through, for example, a service charge.