To approve an extension to business rate reliefs available to new businesses locating on Hereford enterprise zone during 2018/19 and 2019/20. This is to be provided using discretionary locality business rate discount powers and the relief is to be limited to the value of business rate growth generated by the zone.

That:

(a)       discretionary business rate relief be made available to provide relief to new businesses locating on Hereford enterprise zone (HEZ) during 2018/19 and 2019/20, funded from HEZ business rate growth achieved, on a first come first served annual basis;

(b)       the discount be awarded in line with the existing award criteria as detailed in paragraph 13.

Businesses that locate on a government approved enterprise zone can access a number of benefits including up to 100% business rate discount worth up to £275k per business over a 5 year period, £55k per annum.

Hereford enterprise zone (HEZ) is a first round zone which has seen 11 mainly local businesses purchase land and build units on HEZ. A further 10 businesses occupy council developed rental units on HEZ.  In total 21 businesses have relocated to the site, creating and safeguarding 750 jobs and resulting in 28,000 sqm of new floor space and £13m of private sector investment.  There are currently another 9 investors in various stages of negotiation in the pipeline.

The current business rate discount period is coming to an end on 31 March 2018. This means that businesses that occupy the zone ahead of 31 March 2018 will be entitled to enterprise zone business rate relief (if applicable) until 31 March 2023.

Do nothing. This is not recommended because although no additional cost would be incurred by the council, it would result in the slow down and possible loss of private sector investment in Hereford Enterprise Zone (HEZ) from companies looking to buy land and build new units on the site.  The full potential of the HEZ could not be realised in terms of built floor space and jobs created.  This would result in a loss of capital receipts and a reduction of business rates received. 

To provide access to unrestricted HEZ business rate discount. This is not recommended as the recommendation limits the discount awarded to a self-funded basis avoiding any call on council resources. The eligibility criteria also ensures that any discount awarded is granted in line with the intention of the enterprise zone status.  

The granting of business rate relief be funded by the business rate growth secured in prior years. HEZ business rate growth is retained 100% by the council so by using this to award business rate relief the financial impact would be the loss of new monies until the relief granted expires. There implication of this being that by diverting these funds to fund relief reduces the funding that would otherwise be available to fund other services and local economic growth.

To date business rate growth totals £66k, this is forecast to increase to a cumulative growth total of £113k up to 31 March 2018. Assuming growth is as forecast then £113k will be the pot available to award as business rate relief without a cash cost being incurred. The actual pot size will equal the actual value of growth realised. This would mean that the pot of monies to fund any relief in a particular year would be based upon confirmed growth in the preceding year.

This is a discretionary scheme and there will be no right of appeal on any decision made. Herefordshire Council also reserves the right to amend this discretionary scheme and its associated eligibility criteria at any time.