Localism Act 2011: Part 5 Community Empowerment

Alastair Lewis, Partner & Parliamentary Agent, Sharpe Pritchard

Part 5, Chapter 1: Council Tax

Council Tax: New Chapter 4ZA of Part 1 LGFA 1992

• In force from 3rd December 2011• Overview:– Duty to determine whether increase excessive– Duty to make substitute calculations– Duty to hold referendum– Precepting authorities’ duties– Council tax calculations & requirements

Duty to determine whether increase excessive

• S. 52ZB – billing authority must determine whether its relevant basic amount of council tax (“RBACT”) for a financial year is excessive

RBACT

• Billing authorities– RBACT = R ÷ T– R= amount calculated as council tax requirement

for the year– T= amount calculated as council tax base for the

year (which must be notified to precepting authorities)

Council tax requirement and council tax base

• Council tax requirement = expected outgoings less expected income (new ss. 31A and 31B)

• Replaces obligation to calculate a budget requirement

• Council tax base to be calculated by reference to regulations (new s. 31B)

What is “excessive”

• Decided in accordance with principles determined by SoS for the year (s 52ZC(1))

• SoS must compare RBACT with the previous year’s RBACT (s 52ZC(3))

• GLA (s 52ZC(7))• Principles to be approved by Commons (s

52ZD)

Alternative notional amounts

• SoS can make a report specifying an “alternative notional amount” to be used in place of the RBACT for the previous tax year

• Report must be approved by Commons and explain why the calculation is needed

• Why? Where the authority did not exist or where its functions have changed

Duty to make substitute calculations

• If RBACT is excessive, billing authority must make substitute calculations to produce RBACT that is not excessive (s 52ZF).

• Substitute calculation would be used if referendum rejects excessive RBACT

Referendums

• Billing authority must make arrangements to hold referendum if RBACT is excessive

• Must be held no later than first Thursday in May in the financial year (or later if SoS specifies by order)

• Those on electoral register entitled to vote

Referendums - effect

• Original calculations stand if electors say “yes we would like an excessive council tax rise”

• Substitute calculations apply if electors say the opposite (s. 52ZH)

• If council fails to hold referendum, substitute calculations apply (s. 52ZI)

GLA as major precepting authority• Must determine whether RBACT is excessive (s.

52ZB(3))• If so, must make substitute calculations in accordance

with s. 52ZJ• Must notify each appropriate billing authority that

increase is excessive and that the billing authority is required to hold a referendum (s. 52ZK(1))

• Must include additional information in its precept (s. 52ZK(5))

Precept referendums

• Billing authority must hold the referendum• Entitled to recover expenses (subject to SoS

regulations)• The total of all votes cast across London

would be used for determining the outcome

SoS Directions• Where an authority (including GLA) is “in

financial difficulty”• ie where authority will be unable to discharge its

functions in an effective manner or will be unable to meet its financial obligations

• SoS can direct that the referendum provisions do not apply if RBACT is excessive

• But what about cases where a referendum has already been held?

SOS Directions (2)

• Direction must state the amount that is to be the council tax requirement

• Special provisions for GLA – direction may relate only to the relevant constituent body if only one is in difficulty

• Directions may be given to councils before they have calculated their council tax. For the GLA, direction may only be given after it has.

Part 5, Chapter 2 – Community Right to Challenge

Commencement

• Main provisions not in force yet, but regulation making powers, and power for SoS to give advice and assistance are

• DCLG has indicated that the main provisions should come into force in April 2012

Overview

• Provision of “relevant services” by “relevant bodies” (or assistance in providing such services) to “relevant authorities”

• Duty to consider expressions of interest (s. 81)• Timing of expressions of interest (s. 82)• Consideration to be given to expressions of

interest (s. 83)

“Relevant services”

• Services provided by or on behalf of a relevant authority in the exercise of any its functions in relation to England, other than a service of a kind specified in regulations by SoS (none yet)

“Relevant bodies”(1)

• Voluntary or community body– “voluntary body” = a body whose activities are not

carried on for profit (generating a surplus is OK so long as used for body’s activities or invested in the community)

– “community body” = a body that carries on activities primarily for the community (undefined)

– Not public or local authorities

“Relevant bodies” (2)

• A body of persons or a trust which is established for charitable purposes only

• A parish council – relevant for London• Two or more employees of the relevant

authority• Others as may be specified in regulations

(none yet)

“Relevant authorities”

• Includes London Borough Councils• Does not include GLA or functional bodies• SoS can specify other bodies carrying on

functions of a public nature (none yet)

Duty to consider expressions of interest (s.81)

• If an expression of interest is submitted to a relevant authority by a relevant body, the authority must consider it

• Submission must be in writing and comply with other requirements in regulations (none yet)

• “Expression of interest” = expression of interest in providing or assisting in providing a relevant service on behalf of the authority

Timing of expressions of interest (s.82)

• Relevant authorities can specify periods during which expressions of interest generally or expressions of interest in respect of a particular relevant service may be submitted

• Otherwise, they can be submitted at any time• Details of any timing specifications must be

published (including on website)• Authority can refuse to consider submissions

outside the specified periods

Consideration of expressions of interest (s.83)

• Authority must accept or reject the expression of interest (or can modify it – see later)

• If it accepts it, it must carry out an appropriate procurement exercise relating to the provision of the service

• ie appropriate having regard to the value and nature of the contract that may be awarded

Accepting or rejecting an expression of interest

• Authority must consider whether accepting an EoI would promote or improve the social, economic or environmental well-being of its area

• Authority must also consider how well-being may be promoted or improved when carrying out the procurement exercise (so long as consistent with procurement law)

• Expressions may only be rejected on grounds specified by SoS in regulations (none yet) – also remember that they can be rejected if outside a specified time (s. 82)

Consideration of expressions of interest (2) (s.84)

• Authority can modify expression to make it capable of acceptance, with agreement of relevant body

• Consideration procedure:– Max period for consideration generally must be

specified– Must notify person who submits expression of interest

of expected period within which decision will be made– Decision must be notified in writing and notification

must be published

SOS advice and assistance (s. 86): In force already

• SoS can do anything he considers appropriate for purpose of giving advice or assistance to a relevant body in preparing an expression of interest, participating in a procurement exercise or in providing a relevant service

• SOS can also give advice or assistance to any other body (presumably including relevant authorities)

• Includes provision of financial assistance to relevant and other bodies

Part 5, Chapter 3 – Assets of Community Value

Commencement

• Main provisions not in force yet, but regulation making powers, and power for SoS to give advice and assistance are

• DCLG has indicated that the main provisions should come into force in April 2012

Overview

• List of land of community value• List of land nominated by unsuccessful

community nominations• Moratorium on disposal of land• Applies to London Borough Councils

“Land of Community Value” (s.88)• A building or other land is land of community value if

in the opinion of the local authority – An actual current use of the building or other land that is

not an ancillary use furthers the social wellbeing or social interests of the local community, AND

– it is realistic to think that there can continue to be non-ancillary use of the building or other land which will further (whether or not in the same way) the social well being or social interests of the local community

• Subject to regulations (which could exclude specific land or descriptions of land)

“Land of community value”(2)• A building or other land is also land of community value if

in the opinion of the local authority – There is a time in the recent past when an actual use of the

building or other land that was not an ancillary use furthered the social wellbeing or social interests of the local community, AND

– it is realistic to think that there is a time in the next 5 years when there could be non-ancillary use of the building or other land that would further (whether or not in the same way) the social well being or social interests of the local community

• Subject to regulations

List of Assets of Community Value

• A local authority must maintain a list of land in its area that is land of community value (s. 87)

• Land must be removed from the list 5 years after it was listed (unless removed beforehand)

• Regulations can be made about the form of list etc

Procedure for including land in list (s.89)

• Land can only be included in the list – In response to a community nomination or– Where permitted by regulations (none yet)

• A “community nomination” must be made either by– A parish council or– A person that is a voluntary or community body with a

local connection• Regulations can make provision about what is meant

by “voluntary or community body” and “local connection” (none yet)

Procedure on community nominations (s. 90)

• Council must consider all community nominations made

• Council must accept the nomination (and add the land to the list) if the land is in the authority’s area and is of community value

• If nomination unsuccessful, the council must give written reasons

Notice of inclusion in/removal from list (s.91)

• Notice must be given to – Owner of land– Occupier of land– Person who made the nomination– Any other person specified in regulations

Review of decision to include land(s.92)

• Owner of land can ask the council to review the decision to include the land in the list

• Regulations can set time limits for asking for a review

• Council can decide that the land should not have been included in the list

List of land nominated by unsuccessful community nominations/publication• Council must keep a list of land that has been

nominated by an unsuccessful community nomination (includes cases where there has been a review and decision to remove)

• Council must publish both lists, make them available for inspection and provide free copies if requested

The teeth – Moratorium (s. 95)

• Applies to “relevant disposals” of land on the list – ie – disposals of the freehold in vacant possession– disposals of leases in vacant possession with at

least 25 years to run• Owner (defined in s.107) must not enter into a

relevant disposal of the land unless three conditions (conditions A to C) are met

Exclusions (s. 95(5))• Moratorium does not apply to:

– Gifts of land– Disposals by personal representatives of deceased under a will or on

intestacy or to pay debts, costs, taxes or legacies– Disposals to members of the family (defined)– “part-listed disposals” ie where only part of the land is listed

(regulations will clarify)– Disposals of land which are accompanied by disposals of businesses as

going concerns on the land to the same person– Person ceasing to be a trustee– Certain disposals by trustees– Disposals by retiring partners in partnership– Other cases described in regulations (none yet)

Conditions A, B and C• A: The owner has notified the local authority in writing

of his wish to enter into a relevant disposal• B: Either the interim moratorium period (6 weeks from

the notification) has ended without the council having received a written request from a community interest group (to be defined in regulations) for the group to be treated as a potential bidder for the land, or the full moratorium period (6 months from the notification) has ended

• C: The protected period (18 months from the notification) has not ended

Publicising owner’s notice (s. 97)

• Council must make an entry in the list• Council must notify the person who made the

community nomination• Council must make arrangements for

publicity in the area in which the land is situated

Informing owner of bidding request (s.98)

• If a community interest group (not necessarily a group who made the nomination) expresses interest to be a potential bidder, the council must pass on the request to the owner or inform him of details

• Nothing more need be done

Compensation (s.99),land charges (s.100) & enforcement (s.101)

• Regulations can be made about compensation – the section is very wide in scope – councils need to look out for these

• Inclusion in list is a local land charge• Regulations can be made with a view to

ensuring owners do notify councils of relevant disposals, and could include provision to require setting aside of transactions

Localism Act 2011: Part 4 -Non-Domestic Rates

Commencement

• The provisions of Part 4 are almost all in force

Overview

• Ballots for imposition and variations of business rate supplements

• General power to grant rate relief• New small business rate relief scheme• Cancellation of certain back-dated rates

BRS Ballots (s. 68)

• Old position – ballot only required where BRS is to fund more than 1/3 of the total cost of the project

• New position – ballot required for all BRS proposals

• Information must also be published about the result of the ballot in the initial and final BRS prospectuses

General power to grant rate relief (s.69)

• Old position: discretionary relief for NDR was subject to conditions that limited it to certain cases (charities, education, arts etc, rural and agricultural cases, small businesses)

• New position: the conditions will be removed, enabling the billing authority to make rules granting relief in any circumstances

• Note: section 69 is only in force for the purpose of enabling billing authorities to make decisions and determinations which apply to chargeable days after 1 April 2012. Contributions regulations which would normally have to be made before 1 April do not have to be made this year in relation to discretionary relief under the amended section 69

Small Business Rate Relief Scheme (s.70)

• Old position: to qualify for relief, the hereditament had to be below a certain value, prescribed conditions had to be met and an application had to be made

• New position: automatic qualification if prescribed conditions are met

Cancellation of back-dated rates

• Allows SoS to make regulations prescribing conditions for the cancellation of back-dated rates in relation to hereditaments that were on the a local non-domestic rating list compiled on 1 April 2005 where the hereditament was shown as being on the list on that day because of an alteration of the list made after the list was compiled.