Published: 12:00, 10 January 2017
Charity bosses say plans to start levying business rates on voluntary and community organisations could wipe out groups and leave people without vital support.
Medway Council currently offers 100% business rate relief to charities, not for profit organisations and community amateur sports clubs - meaning they pay nothing - but new proposals would introduce limited rates.
The council’s Business Support Overview and Scrutiny Committee discussed various options last week but its preferred “Option 2” would see all charities connected with animal welfare, ‘lifestyle’ (which includes religion, arts and education), heritage and regeneration, forced to pay 20 per cent of their full business rates.
Not for profit organisations connected with animal welfare would pay 30% rates, those connected with ‘lifestyle’ would pay 50% rates, and those connected with heritage/regeneration would have their relief cut entirely.
Several organisations including Medway Asthma Support & Help (MASH) have said the proposed rates could force them to close, while Age UK has stated it could have to increase charges for day centre users.
Neville Dack, business development officer for Medway Voluntary Action - which supports voluntary services across Medway - said the rates could take a heavier toll than the council realised.
“It comes at a time when there’s a perfect storm affecting the VCS (Voluntary and Community Sector),” he said. “We’re looking at reduced funding, there’s increased competition for other funds, and everything’s being commissioned - services used to be grant funded but now they’re competitively commissioned.
“In our office we’ve got the Red Cross, Family Action, MEGAN (Medway Engagement Group and Network), and an accommodation service for the homeless - all of these are going to see increased costs.
“A lot of them are on contracts - if you’re on a three year contract and halfway through, your costs go up, it’s going to have an impact.”
Mr Dack said the potential savings were limited but could damage an “ecosystem” of voluntary organisations that had taken years to build.
“I’ve got every sympathy with the council,” he added. “You’ve got to understand they’ve had huge cuts to their budgets and everything they do is reduced to core priorities.
“It’s hard as it is, but this will make it harder.
“There’s a danger they could kill the goose that lays the golden egg.”
John Norley, chief executive of Age Uk and chairman of Medway VCS Leaders’ Network said any savings made by the council would be outweighed by the cost of administering the proposed new system. And he said the council needed to understand this was a “make or break” situation for charities which were suffering “death by a thousand cuts.”
“It would certainly see some charities go down,” he said. “I hope they just leave it as it is.”
“The net savings between doing nothing and doing something different is about £72/80,000, and I don’t think they’ve thought about how they would go about administering that. The cost would far outweigh the savings.”
The proposals are now set to go before Medway Council’s cabinet next week, and Labour leader Cllr Vince Maple has requested to speak at the meeting to stress points raised by voluntary organisations.
He said charity representatives had made powerful statements about what impact the rates would have, adding: “it is disappointing that Conservative Councillors didn’t support these organisations and voted against our proposal especially as many of the organisations have councillors representing Medway council on their boards and are fully aware of how tight financial margins in the voluntary sector can be.”
Cllr Teresa Murray, Medway Labour Deputy Leader said: “The representations we received made it absolutely clear that Tory Medway council can’t have it both ways. The Council relies on the voluntary sector to deliver services and strategic priorities, and if their costs increase, those they help will pay more or lose out. These organisations improve the lives of many people and we should be grateful for the work they do and demonstrate that by supporting them.”
Medway Conservatives said central government funding cuts had forced changes, but the proposals were “modest”.
Portfolio Holder for Business Management Cllr Rupert Turpin said no charity would receive less than 80% relief and many will continue to receive 100% relief, but added: “Whilst everyone appreciates the valuable work of charity shops and cafes, we are also mindful of the shops or cafes which may be in the same street and paying full business rates without the benefit of volunteer workers.
“These shops are also vitally important to the future of our high streets and many are struggling to compete.”
He said the MVA offices would get 100% relief as would those charity offices located in the same building, and that MASH would get 100% relief as their shop premises was not used for commercial activity.
Mayor Medway Cllr Stuart Tranter said the proposed system was “about fairness”, adding: “the existing system of discretionary rates relief has been very black and white; either an organisation qualifies or it does not.
“The new system allows us to apply a sliding scale depending on the purpose of the organisation and who in our community receives help. I think some people have overlooked the fact that charities and registered Community Amateur Sports Clubs will still get 80% statutory relief anyway. So some organisations that have paid nothing will now make a small contribution towards the services provided, including police and fire. We think that is fair. If there are exceptions, we can look at those cases individually.”
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