Council will have to wait for rates cash
BUSINESS RATES WILL BRING IN MILLIONS – EVENTUALLY
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TEES Valley Mayor Ben Houchen has spoken of his confidence that “vast amounts” of business rates will eventually be created by the Teesworks industrial site near Redcar.
Mr Houchen’s South Tees Development Corporation (STDC), which has overall responsibility for the site, said it was estimated that by 2026 a total of £31m could be generated each year in business rates income with similar figures being quoted by the mayor.
Under current arrangements, which saw the Government designate Teesworks as a special economic area, this would be split 50/50 between the local authority, Redcar and Cleveland Council, and the STDC.
Mr Houchen said the requirement to pay business rates would only kick in when there was practical completion of a new factory, with the first in line being the SeAH offshore wind monopile facility, which is due to be operational from the middle of next year.
Teesworks also contains two of the designated tax sites within the Teesside freeport, which means for the first five years of any new operation the business rates bill will be covered by the Government, rather than individual businesses, provided they locate in the area before September 30, 2026.
Former Redcar and Cleveland Council leader Sue Jeffrey, who stood down prior to local elections in May, said there was frustration that local people were having to wait for any benefit in terms of business rates income that could go towards paying for council services.
She said: “It is clear to me that it is going to be some time before the council receives business rates income, while the private sector partners are doing very well and already taking cash out of the site.
“This income would make a huge difference to the ongoing crisis of funding for council services.”
Mrs Jeffrey, who unsuccessfully challenged Mr Houchen in 2017 for the newly created post of Tees Valley mayor, submitted a Freedom of Information request seeking information about the business plan for the Teesside freeport, of which Teesworks is a part and that provides a package of incentives designed to stimulate business growth.
It included a response from consultancy firm WSP seen by the Local Democracy Reporting Service (LDRS) that stated there could be as much as £821m in business rates generated over a 25-year period.
There did, however, remain a “significant degree of uncertainty relating to the final commercial operations which will be located on freeport land”.
It also said that “earlier delivery meant more years benefit via levers such as business rates”.
But Mrs Jeffrey complained some information she had been seeking was redacted, or deemed exempt from public disclosure for risk it would prejudice commercial interests.
This included details about retained business rates and modelling around future tax benefits.
The former council leader said: “The fact the information about business rates is not entirely public seems completely unacceptable given the importance of this cash to the future financial security of the council.”
The LDRS put this criticism to the STDC, although it did not directly address Mrs Jeffrey’s concern.
Explaining the scenario with business rates, Mr Houchen claimed vast amounts of cash would be generated to the benefit of the local area instead of some of it going back into a national pool.
He said: “One thing we negotiated with the Government was instead of the council getting 50% and the other 50% going off to London, STDC keep the 50% that was to go to London, the council keep their 50% and that all stays within the region for reinvestment.
“The council will then reinvest that in services and what we’ll do is, where the council would normally be responsible for adopting roads and all of that normal infrastructure they would pay for, we have said to them they don’t need to do that because STDC is keeping the rest and we are going to be able to invest that.”
Business rates are calculated by multiplying the rateable value of a property by a Government-set multiplier, which is determined by the size of the business.
An STDC spokesman said: “We have received estimations that the Teesworks site will generate £31m in business rates every year by 2026.
This estimation is subject to full detailed pieces of work being undertaken working with the Valuation Agency Office.”
Teesworks has been in the national spotlight after a series of revelations about the finances and ownership of the site once occupied by the former SSI steelworks.
The Government recently announced an independent review into aspects of the regeneration scheme following claims that private developers have benefitted disproportionately from the transfer of publicly owned land and assets.