Chorley Council could face a £1.5m bill if a local hospital trust succeeds in its appeal for special exemption from business rates.
A report to councillors reveals that Lancashire Teaching Hospitals NHS Foundation Trust, which runs Chorley and South Ribble Hospital, has made two bids for so-called “mandatory charitable relief”. The status entitles relevant organisations to a business rate discount of up to 80 percent.
If successful, the appeal would be backdated to 2010 and have a “significant impact on the Council’s revenue budget”, documents show.
The authority confirmed the potential one-off cost of repaying the money following a meeting at the town hall. It also revealed that the council's income would be reduced by £200,000 on an on-going annual basis - if the decision goes in the trust's favour.
Members were further warned that uncertainty over planned changes to how the government distributes business rates poses a potential threat to how much Chorley receives.
Meanwhile, the council faces a third challenge to this major source of income, if a nationwide revaluation of business rates - due to come into force in 2021 - sparks a significant number of appeals from affected firms in the borough.
The annual outturn report, which details the council’s income and expenditure, also shows Chorley Council spent £610,000 less than the £15.5m budget it had available last year.
The figures show that the council made unexpected savings in staffing costs, after leaving some of its vacant posts unfilled while a departmental restructure is completed. The move boosted the council’s coffers by £146,000.
But the documents, presented to a meeting of the full council, also show that the authority had to dip into a reserve for so-called ‘Change Management’ to fund one-off redundancy and pension costs to the tune of £241,000.
The report reveals that the remaining balance in that fund - of £112,000 - will be insufficient to cover the costs of future staffing changes. It is recommended that the council uses almost half of last year’s overall underspend to fund as-yet-unidentified employment costs.
The borough benefited from increased income from its building control service for planning issues, as well as for burial fees, during 2017/18.
And there were also fewer than expected overpayments of housing benefit, meaning the council reduced its bad debts and will receive a greater share of a government benefits grant as a result.