Local authorities are relying more and more on business rates, and by 2020 will be able to keep 100 per cent of money collected – compared to 49 per cent at present.
In Sheffield there are about 18,500 business premises liable to be taxed, potentially bringing in £544 million per year.
But actual predicted income, taking into account the 50 per cent given back to the Government and one per cent to South Yorkshire Fire Authority, is £96.7m in 2017/18.
With cuts elsewhere, the priority for the council is therefore to maximise the money it can take in business rates before 2020.
The authority is allowed to keep the full rates from any growth above a baseline rate set in 2013/14.
Prosperous areas with businesses paying high rents translates to more money for councils, while deprived areas are more likely to include small business premises with low rents.
Both the retail quarter, which should feature modern, high rent units, and the enterprise zone at the Advanced Manufacturing Park are therefore seen as key to forthcoming budgets.
Figures in this year’s draft budget show a projected income of about £3m from the retail quarter and £5.4m from the enterprise zone – together making up about 1.6 per cent of the total possible business rate total.
Demolition of the Grosvenor House Hotel to make way for phase one of the retail quarter is underway.
HSBC has already signed up as the main tenant for the six-storey office block.
But the key aspect of the development is the second phase, featuring a key anchor tenant – expected to be John Lewis.
The business rate issue makes completion of the project all the more pressing.
Another complication is the ability of businesses to appeal against the council’s rate valuation, and losses as a result are difficult to forecast, according to the council.
As of December 31 more than 1,5000 premises were under appeal, which the council says could be ‘very costly’ to the collection fund.
The authority has set aside £33.3m to cover possible successful appeals.