Leeds Council set to expand rates relief for social enterprises

Leeds City Council is amending its guidelines to encourage more social enterprises to apply for relief from business rates.

Under recommendations going to the Council’s Executive Board next Wednesday (12th October), a new social enterprise that provides a service of benefit to the general public, and has extensive involvement with those defined by the Council as “priority groups”, could be exempt from paying 80% of the business rates.

A report from the Council’s Chief Officer Revenues and Benefits says that “recent experience of supporting Social Enterprises such as Shine, Tiger11 and Chapeltown Development Trust through the Local Enterprise Growth Initiative (LEGI) programme underlines both the social impact that Social Enterprises have in their local communities, and the impact that this measure could have in supporting sustainability.”.

While social enterprises are currently not excluded from receiving discretionary relief, the 2009 guidelines currently in force make no specific mention of them and set the maximum relief at 50%. The latest recommendations aim to put that right, setting specific criteria against which applications will be assessed, and promoting these to “encourage increased applications from this sector”.

“Support the Council’s wider aims”

“Any relief awarded to such organisations (social enterprises) needs to be targeted at those whose activities are most beneficial to council taxpayers as a whole, and support the council’s wider aims,” the report says.

Applications will be assessed by the Council’s Business and Enterprise Team against the following criteria:

* Organisations which restrict membership will not receive support

* Organisations which provide a service which is of benefit to the general public but have limited involvement with priority groups will receive 10% (Category 1)

* Organisations which provide a service which is of benefit to the general public and have more involvement with priority groups will receive 25% (Category 2)

* Organisations which provide a service which is of benefit to the general public and which have extensive involvement with priority groups will receive 50% (Category 3)

* Organisations which meet the criteria for category 3 relief and are in the first year of trading will receive relief of 80% for the first twelve months

Relief will be awarded up to the end of the financial year in which the application is received and a new application will be required for subsequent financial years.

The report estimates that the new measures could deliver £200,000 worth of rates relief to the Leeds social enterprise sector, with the Council paying for 25% (£50,000) and the rest of the tab being picked up by central government.

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3 Responses to Leeds Council set to expand rates relief for social enterprises

  1. Mike Chitty says:

    Of course, when we say that the rates cut will be paid for by Leeds Council and the Government we really mean they will be ultimately paid for by the ‘for profit’ sector through taxation. If I was running a privately owned managed work space and finding business rates to be an almost insurmountable challenge – I would be spitting feathers. Or perhaps I would just draw a salary, become a social enterprise and fill my boots….

    We are using ‘social enterprise’ to build more conference and managed work-space capacity in the city which is already oversupplied. Is this really an area where we can claim there has been a market failure? If it is a market failure it is a failure of demand rather than supply.

    Using public money to help ‘social enterprise’ to compete with the traditional for profit sector seems to me to be a dubious and ultimately unsustainable approach to both economic and community development. Still, it creates work for the people who have to administer the scheme, apply the criteria and monitor delivery.

  2. There’s a para in the report that I probably should have included that says it’s not intended that the relief will be given to organisations that are in direct competition with small businesses like
    specialist shops or services.

    I don’t know much about it, but my guess is that they’re thinking of organisations who can demonstrate that they’re up for jumping through the hoops of the Priority Plan.

    • Mike Chitty says:

      Well, both Shine and Tiger 11 are primarily in the conference and managed workspace business but I suppose they only compete with ‘medium sized and big businesses’, which is of course just fine…

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