Posted tagged ‘exemption’

Moving money around

November 21, 2011

Fifty here, fifty there; sooner or later it'll be real money

As councils prepare their budget savings for the year ahead they are often forced to do some quite ridiculous things in order to meet their savings targets.

I was put onto this topic by the excellent Richard Taylor who writes an extremely detailed blog looking at the detail of decisions made by Cambridge Council and other public bodies. In this particular piece he was commenting on the local leisure contract being awarded by the council. This particular contract was delivering savings of £500,000; all of which were coming from the fact that the outsourced company had charitable status and could therefore claim an exemption on local business rates.

As Richard pointed out:

It is obvious to me that we need to elect MPs who will exempt local councils from paying rates on swimming pools and libraries. It’s bonkers that when such facilities are run by councils they have to pay rates, but if run by others they can be rate free.

This surely that can’t be right. The company aren’t doing anything different to that which the council could do; the only difference is that they get an exemption on a tax which eventually comes back to the council in its funding.

The change being made is not making a real benefit to the overall health of the nation’s finances. The £500,000 saving is simply a £500,000 reduction in money being spent by local government and received by local government.

And yet local councils up and down the land are considering making similar changes as it helps them protect their bottom line. Apparently, even the Government’s proposed reforms of NNDR do not address these issues.

I had a bit of a rant about this being ridiculous in the office and was met with a number of raised eyebrows. Apparently, this is all too common.

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