Business rates killing high street shops

“Leading retailers called for a major overhaul of business rates yesterday after Next suffered a sharp slump in store sales in the run up to Christmas.

With pressure mounting on ministers to reform the outdated tax, fashion chain Next said sales in its 500-plus stores fell 9.2 per cent over the crucial festive period.

In a clear sign of how shopping habits have shifted, the company said online sales soared 15.2 per cent in the same period, meaning overall revenues were up. …”

https://www.dailymail.co.uk/news/article-6556311/Retailers-demand-major-overhaul-business-rates-Christmas-sales-slump-9-2-cent.html

“Quarter of shop space in England and Wales lost after 2008 crash”

“More than a quarter of all retail floor space in England and Wales disappeared in the aftermath of the 2008 financial crisis, research has shown, as the industry struggled with the shift to online purchases.

The amount of shop space fell in all but five of 348 local authorities analysed in the study by academics at Northumbria University, Newcastle.

In 2008, there was more than 157m square metres of retail floor space in England in Wales. By 2015, the figure had dropped to just under 114m square metres, a 27.6% fall.

The analysis covers the period before the latest crisis to hit the UK retail sector, which has led to the collapse of high street brands including Toys R Us and Maplin. Many others including Marks & Spencer and Debenhams are closing stores and cutting staff.

Alongside the rapid rise of online shopping, retailers have been affected by consumers’ weak income growth.

The rateable value of retail property fell in two-thirds of the local authorities analysed during the period, despite the loss of a quarter of the total supply.

The figures illustrate a stark divide between regions. The value of central London locations surged during the period, with the biggest increase recorded in Westminster, where the average rateable value for retail premises grew by almost 80%.

In contrast, the value of retail property in south Wales slumped as areas such as Swansea, Port Talbot and Bridgend suffered from the decline of the steel industry. The local authorities on the south coast of Wales between Cardiff and Swansea all saw the rateable value of properties fall by more than 20% between 2008 and 2015.

The study compared the government’s data on business rates paid by companies on their property. The data was made available in the 2010 and 2017 rating lists.

The fall in the total rateable value of retail space could have significant implications for Britain’s model of funding local public services, said Paul Greenhalgh, a professor of real estate and regeneration at Northumbria, and a leader of the research.

Under changes to the funding formulae introduced by George Osborne as chancellor, local authorities keep more of the money collected from business rates. A fall in the total rateable value of properties in a local authority area could therefore leave the authority’s budget more exposed to price fluctuations in the property market.”

https://www.theguardian.com/business/2018/dec/03/quarter-of-shop-space-in-england-and-wales-lost-after-2008-crash

Councils face £500m bill after bank cash machine business rates ruling

“Councils face an estimated combined bill of up to £500m to refund supermarkets after the Court of Appeal ruled that cash machines should not be assessed separately for business rates.

Retailers Tesco, Sainsbury’s and The Cooperative Group, along with ATM operator Cardtronics Europe have won their challenge to a 2010 decision by the Valuation Office Agency to create separate entries for the sites of supermarket cash machines.

Property consultancy firm Altus estimates that the backdated bill which businesses will be due via rebates at £382m, while property consultancy Colliers put the figure at £496m. …”

http://www.room151.co.uk/resources/councils-face-500m-bill-after-atm-business-rates-ruling/

“More than 200 UK shopping centres ‘in crisis’ “

“More than 200 UK shopping centres are in danger of falling into administration, experts are warning.

Analyst Nelson Blackley said the demise of “major anchor stores” such as BHS and Toys R Us, and the rise of online retail, had caused a “downward spiral”.

Many of the at-risk centres are owned by US private equity firms under deals that will need refinancing.

“If centres close, particularly in small towns, it will be catastrophic,” Mr Blackley warned.

The Department for Communities said it was “committed to helping communities adapt”.

Mr Blackley, from the National Retail Research Knowledge Exchange Centre, said the UK had an excess of shopping centres with similar retail offerings.” …

https://www.bbc.co.uk/news/uk-england-45707529

“The High Streets that missed out on millions: The Chancellor’s got £1.6bn to help shops but councils failed to make full use of his last helping hand”

“Struggling High Street shops have missed out on millions of pounds of vital emergency funding following a series of shambolic blunders.

On Monday, Chancellor Philip Hammond announced a £1.6 billion lifeline for Britain’s High Streets, which included a £900 million relief package to help shops battling sky-high business rates.

It means that around 500,000 shops, pubs, restaurants and cafes are expected to see their rates bills cut by up to a third over the next two years.

The Treasury will also set aside £675 million to help councils rejuvenate their town centres.

But it is the Government’s second attempt at helping the High Street, after a £435 million business rates relief package was announced in 2017.

This was supposed to help businesses struggling to pay their business rates.

However, Money Mail can today reveal that millions of pounds from the first fund failed to reach the businesses it was intended to help, and was instead returned to Treasury coffers.

As many as three-quarters of councils failed to hand out their allocated cash to ailing local firms. In some cases, councils spent only an eighth of their budgets, while others helped as few as five shops.

One local authority failed to spend almost £800,000 of its extra funding.

Eighteen months ago, more than 500,000 shops, pubs and restaurants were hit by business rates hikes — a tax on bricks and mortar businesses.

Following a Money Mail campaign, ministers pledged to introduce a £300 million fund for councils to distribute to those worst affected over four years, as part of a wider £435 million business rates relief package.

Some £175 million of this had to be spent in the first 12 months — by the end of September — or be returned to the Government. But many councils misunderstood the rules, while others failed to promote the scheme or made it too complicated for small businesses to apply.

Some councils claim the Government did not give them enough time to distribute the money before it was lost.

Embarrassingly, the council in former Communities Secretary Sajid Javid’s own constituency, Bromsgrove, Worcestershire, handed out only a third of the cash it had been given to help its High Street.

Mr Javid, now Home Secretary, was previously in charge of ensuring the fund was distributed by councils and had promised ‘absolutely no delay’ in doing so.

Yet figures collated by Retail Express and chartered surveyors Bankier Sloan reveal just £46,300 of the council’s £134,500 pot was given out in time — helping only 37 businesses.

Nearby Redditch Borough Council helped only 21 shops and spent just £15,800 out of £124,000, an eighth of its budget.

Stevenage Borough Council, Hertfordshire, gave cash to just five businesses in the town and awarded £18,800 out of a possible £100,000.

While Swindon Borough Council, Wiltshire, spent only £58,000 out of £314,300, helping 41 businesses — with more than a quarter of a million pounds leftover.

Fenland District Council, in Cambridgeshire, spent £21,277 out of almost £160,000, barely a seventh of its budget.

And Broxbourne Borough Council, in Hertfordshire, spent a fifth of its pot, distributing £38,000 out of £213,500 and helping only 31 shops.

Camden Council, North London, allocated 100 per cent of its fund, but said shop closures meant that, in the end, it was only able to hand out 86 per cent of it.

It meant that, despite distributing £4.84 million to businesses, it had £790,000 leftover.

By contrast, around 30 councils spent all of their funding. Barnsley Council, for example, spent every penny of its £276,000 and helped an incredible 2,135 businesses.

Jerry Schurder, head of business rates at consultancy Gerald Eve, branded the distribution of the grant ‘shambolic’.

He says: ‘It was a poorly designed fund by the Government and a knee-jerk response to the backlash against the rates revaluation.

‘It was then badly implemented by some councils which did not pay sufficient attention to the criteria.’

The fund was supposed to help the smallest businesses facing the greatest rises.

The Government decided how much money to allocate to each council by calculating the total increase in bills for firms facing a minimum 12.5 per cent rate rise and with a rateable value of less than £200,000 — the rental value on which business rates are based.

But many councils used this same rigid criteria when deciding which firms should receive cash —awarding it only to those hit by rate rises of more than 12.5 per cent.

In fact, councils had total freedom to spend the cash however they wished, as long as it went towards reducing business rates bills.

Some councils excluded businesses they felt did not need the cash as desperately, such as schools, banks and estate agents.

Meanwhile, multinational firms and Government bodies were typically excluded because they had exceeded state aid limits via other grants.

The Ministry of Housing, Communities and Local Government refused to say how much cash had not been spent.

But research by Retail Express suggests it was as much as £17.5 million — 10 per cent of the budget.

A series of Freedom of Information requests showed that 159 out of the 195 councils that replied had failed to spend all of their grant by the end of April.

The deadline to hand out the cash was actually September 30, but many councils stopped distributing the 2017/18 grant at the end of the financial year.

News editor of Retail Express, Jack Courtez, who led the research, says: ‘I think it is incredible that councils claim they are being squeezed by a lack of central Government funding, but when they do receive money they fail to distribute it.

‘Many councils have let down local businesses which depended on this funding.’

Chartered surveyor Ian Sloan, of Bankier Sloan, who contacted councils to warn them they faced a massive under-spend, says: ‘The distribution of this fund has been a mess. Local businesses have lost out on money they really needed and now the money is gone.’

Councillor Matt Dormer, leader of Redditch Borough Council, says that as the funding is drawn from general taxation, the council has ‘a duty to spend it in an appropriate manner, and not to simply seek to spend as much of it as possible.’

Bromsgrove Council says it had to bear in mind that ‘any relief given to people facing an increase in their rates gives them a competitive advantage.’

Broxbourne Borough Council said that ‘100 per cent of businesses who completed and returned application forms were granted the relief.’ Swindon Council says it had to award cash automatically when few firms applied.

Stevenage Borough Council said it has already granted £32,392 of the £36,000 it has been allocated for the coming year. And Fenland Council says it would give higher amounts to successful firms this year as a result of the low take-up of the relief in 2017/18.

Camden’s Councillor Richard Olszewski says the council awarded all of its funds but ‘due to businesses moving in and out of the borough and a substantial number of successful rating appeals’ it was then unable to distribute it all before the deadline. This year it has over-allocated funds to allow for business turnover.

A total of £175 million was supposed to have been handed out in 2017/18, followed by £85 million this year, then £35 million in 2019/20 and £5 million in 2020/2021.

A Government spokesman says: ‘To help local businesses thrive, we have introduced over £10 billion worth of business rates support so nearly a third of all business pay no rates at all.’ “

https://www.thisismoney.co.uk/money/news/article-6335101/The-Chancellors-got-1-6bn-help-shops-councils-failed-make-use-helping-hand.html

Cranbrook town councillors attempt to block mobile catering vans is defeated

Owl says: This is what happens when you fail to build a proper centre in a new town.

“Members differed in their opinions when deciding whether to support a request for annual street trading consent from Richard Filby, who runs popular chip van Flippy Chippy.

Councillor Ray Bloxham said granting consent would go against Cranbrook’s ‘healthy’ image, as it is just one of ten sites selected to join NHS England’s national Healthy New Towns programme. He said: “We are trying to do something about the health of our town.

“We need to, at some stage, make a stand against this type of thing because it is not good.”

Cllr Bloxham said there is a ‘proliferation’ of mobile businesses coming into Cranbrook, which do not pay business rates and sell ‘unhealthy food’ to the community.

Cllr Sarah Gunn said a fish and chip shop is set to open in Cranbrook soon and the council needed to support it. She added: “It is not cheap rent or business rates – there are no concessions.

“A chip van up the road is going to make that very hard.”

Cllr Matt Osborne said Flippy Chippy is ‘well known and liked’ in Cranbrook, and had been involved with a lot of community events held in the town.

He said: “If we take that away when there is a chip shop opening, the backlash will be quite severe – because we are the reason people can not have fish and chips in town anymore.

“I think we will get some kind of movement against that.”

Cllr Bloxham proposed the council objects on the grounds that Cranbrook is a Healthy New Town and the council is ‘trying to promote healthy living’.

He added: “It is unfair competition for businesses trying to set up shop in the town. [Flippy Chippy] has no overheads apart from a bit of petrol.”

Cllr Bloxham’s proposal was defeated by four votes to three.

Cllr Les Bayliss said two other mobile companies sell food in Cranbrook and it would be unfair to object to Mr Filby’s request.

He proposed the council supports the trading consent request, but his motion was also defeated by three votes to two.”

Councillors finally agreed they would send their comments to East Devon District Council, which will decide whether to grant consent at a future date.

Mr Filby’s application is to trade from a catering van every Monday, from 4.30pm to 7.30pm, on Younghayes Road (by the country park).

http://www.midweekherald.co.uk/news/council-split-in-deciding-whether-to-support-street-trading-request-from-popular-flippy-chippy-food-van-1-5749353

First they changed offices to homes, now it’s shops

Will they be affordable ……….

… Experts believe that turning unused shops into houses could stop the decline of town centres – as well as bringing down sky-high property prices.

Mr Hammond is also under pressure to freeze business rates which are blamed by retailers for helping to hollow out the high street.

A spokesman for the Treasury said: “We don’t comment on Budget speculation.

https://www.thesun.co.uk/news/7556955/empty-shops-could-be-turned-into-homes-to-solve-britains-housing-crisis-and-make-property-cheaper/