Small businesses accuse government of failing them

“Theresa May’s Government today stands accused of failing to back small businesses, in a report due to be launched by Home Secretary Sajid Javid.

A damning poll reveals three in five people think the Tories are letting down the army of small firms which are vital to the economy and town centres.

The findings come from a YouGov survey of 1,644 adults for the Centre for Policy Studies think tank, which was founded by Margaret Thatcher.

It revealed 60% of people believed the Government “is not on the side of small business”, with just 14% disagreeing. …

This report shows how bureaucracy and paperwork are stifling the growth of our small businesses and offers a series of compelling ideas for how Government can roll back the tide and show that the Conservatives are backing entrepreneurs.”

https://www.mirror.co.uk/news/politics/small-businesses-damning-verdict-nine-16052199

Bad news for councils on business rates and empty properties

“Councils may be left unable to claim some £10m in business rates after Rossendale Borough Council lost a test case in the Court of Appeal over empty properties.

The case arose over property owners who lease unoccupied premises to another company which then becomes liable for business rates. The second company is then either voluntarily liquidated or struck off without liability for rates returning to the first company. …”

https://www.localgovernmentlawyer.co.uk/property/404-property-news/40072-court-of-appeal-blow-for-councils-over-business-rates-and-empty-properties

“Ministers urged to provide rescue package for ailing high streets”

“The government should consider taxing online sales, deliveries or packaging and cutting property taxes for retailers as part of a package to help revive the UK’s ailing high streets, according to an influential group of MPs.

In a report published on Thursday, the housing communities and local government committee says local authorities need more help, including extra cash, to redevelop town centres. It also suggests an overhaul of planning regulations, including scrapping rules that allow developers to turn offices into flats without special permission.

Clive Betts MP, the chair of the committee, said it was likely that “the heyday of the high street primarily as a retail hub is at an end”. However, he added: “This need not be its death knell. Local authorities must get to grips with the fact that their town centres need to change; they need to innovate, setting out a long-term strategy for renewal, reconfiguring the town centre and finding new ways of using buildings and encouraging new independent retailers.”

Betts said dated planning policies and unfair business rates, which are a tax based on the value of property occupied by a business, were “stacking the odds against businesses with a high street presence and this must end”. …”

https://www.theguardian.com/business/2019/feb/21/ministers-urged-to-provide-rescue-package-for-ailing-high-streets

“Struggling retailers closed a record 18,355 stores in 2018”

“More shops closed down in 2018 than in any year on record, as the crisis on the high street deepened and retailers went into full retreat.

Analysis for The Sunday Telegraph by the Local Data Company shows that 18,355 stores brought their shutters down for the final time.

There were around 13,676 shop openings last year, producing a net loss of 4,679 retail outlets, up more than 1,600 on 2017 as retailers such Marks & Spencer scrapped expansion plans.

Including banks and restaurants the total number of consumer outlets that closed was 50,828, also a record. …”

https://www.telegraph.co.uk/business/2019/02/09/struggling-retailers-closed-record-18355-stores-2018/
(pay wall)

Exeter and Plymouth HMV stores close

When the new owner asked who would decide which 27 stores he would close, he said:

Landlords

In Exeter the House of Fraser store was saved by doing a deal with landlord Exeter City Council.

Princesshay is owned by The Crown Estate/TH Real Estate which had already pulled out of extending the shopping centre last year.

Will Tesco cuts revitalise high streets? Almost certainly not

“TESCO is set to axe 15,000 jobs as part of £1.5bn cost-saving measure that will see fish, meat and deli counters across the country close down.

Bakeries will also be overhauled, with the supermarket giant now ordering staff to use pre-frozen dough instead of making it on site. …”

https://www.thesun.co.uk/news/uknews/8288025/tesco-axe-15000-jobs-meat-fish-deli-counters/

After putting so many butchers, fishmongers, bakeries and delis out of business, will this revitalise high streets?

Owl thinks not. The killer combination of high business rates, increased town centre parking charges and poorer public transport makes it uneconomic for small businesses to return to high streets.

Enterprise Zone “gazelle” companies (some in Devon) have unintended consequences

“Britain’s fastest-growing businesses could be contributing to job losses, according to research that claims the government’s policy of backing entrepreneurial companies “may be fundamentally at odds” with tackling regional inequalities.

A study of the performance of more than six million companies over a period of 17 years found that high-growth businesses had a “spillover” effect that could damage local employers.

Fast-growing companies, sometimes dubbed “gazelles”, have been identified in recent years as a way of boosting job creation and improving the nation’s productivity. Despite accounting for less than 5 per cent of businesses, these companies create about half of all new jobs and typically show higher levels of productivity.

However, the study, conducted by the Enterprise Research Centre, found that companies with the fastest employment growth — 20 per cent growth every 12 months for three consecutive years — tended to grow by “hoovering up” jobs from slower- growing businesses in the same region, in what the researchers called a “crowding-out competition effect”.

A 1 per cent rise in the incidence of high-growth businesses in a region was found to actually slightly cut employment, by 0.35 per cent on average — equivalent to a net loss of about 122,000 jobs UK-wide over the period studied, 1997-2013. The worst affected regions included the Scottish Highlands, Cheshire, the North East, Lincolnshire and Devon. In contrast, many urban areas in the South East and Midlands saw a net jobs gain.

Negative effects were most pronounced in the manufacturing sector and rural parts of the UK, where competition for skilled workers was most intense, the researchers said.

The fastest growing companies often attract the most skilled workers in a region where such staff are scarce, leaving slower-growing rivals struggling to attract employees and having to pay more to keep existing team members. As a result they hire fewer people and could be forced into job cuts.

Mike Harding, director of Inspira Digital, said that his ecommerce agency based in Barnstaple, Devon, competes with a London-based agency with a satellite office in north Devon. “If you have someone offering London wages here, that is a black hole that sucks up the local talent,” he said.

The issue can be exacerbated by large companies being offered tax breaks to open an office in Devon in the name of local development, Mr Harding said.

Professor Jun Du of Aston University, one of the authors of the research, said that “while encouraging clusters of fast-growth firms can bring productivity benefits to whole supply chains, some regions and industries with acute skills shortages could see unintended consequences”.

Source: The Times (pay wall)