Category Archives: Business Rates

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30 Sep 2018

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Accountability, Austerity cuts, Business Rates, Economy, High Street decline, Inequality

“Business rates: one John Lewis store will pay four times the tax of Amazon”

“John Lewis, the embattled retailer whose profits collapsed by 99% in the six months to July, will be charged £10.5m in business rates for its flagship Oxford Street shop from April, according to new figures — a 60% rise in three years.

A short walk away, Selfridges’ flagship shop also faces a 60% hike: its business rates bill will climb to £17.5m. That figure is almost four times the total UK corporation tax paid last year by the online retail giant Amazon: just £4.5m.

The looming threat to the high street will put pressure on the chancellor, Philip Hammond, to throw businesses a lifeline when he delivers his budget on October 29.

This weekend, Helen Dickinson, the chief executive of the British Retail Consortium (BRC), said: “These figures lay bare the shocking burden the business rates regime places on British retailers, who make up 5% of the economy and pay 25% of business rates — £7bn a year. The rates bill is leading to store closures, preventing the reinvention of our high streets, and is damaging communities the length and breadth of the UK.”
The BRC is lobbying for a two-year freeze in business rates until a revaluation in 2021, while the New West End Company, which represents businesses in London’s West End, is lobbying for a rates reduction of £5bn. This would be financed by a 1% tax on online businesses but would not apply to traditional retailers’ internet sales.

High street trading has been squeezed by online shopping, which now accounts for 18.2% of the market, with fewer stores surviving to shoulder the rates burden.

A phased four-year settlement in 2017 will bite hardest from April, with some stores facing huge increases. Burberry, which this month unveiled a new collection, faces a hike for its London headquarters of 186% compared with its rates in 2016-17.

In Manchester, Zara must pay £1.26m and Manchester City football club £2.4m, up from £1.7m in 2016-17.

Altus Group, the property adviser that researched the figures, found NHS hospitals will have to pay £386m and council-controlled state schools £957m.

Nickie Aiken, the Conservative leader of Westminster council, said: “Our taxes should reflect our way of life. I would ask the Treasury: do we want to continue the decline so that the only things left on the high street are charity shops and betting shops?”

Source: Sunday Times (pay wall)

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25 Sep 2018

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Audit (EDDC), Austerity cuts, Business Rates, Developers/ Development, EDDC, High Street decline

Resuscitating high streets – or are they too far gone already?

Owl is noticing more and more empty shops – even in places that seemed to be weathering the High Street decline so far (eg Sidmouth).

Isn’t it time our council did an audit of our high streets (empty shops, open shops, temporary pop-up shops, local-owned independent, chain stores, charity shops) to get a proper idea of just how bad this problem is in each town and what the mix says about the health of each town centre? And time to come up with a strategy for their future?

“… Charges to withdraw money from cash machines would be scrapped under a Labour government to “save Britain’s high streets”.

Attempts to stop their “slow agonising death” were announced by shadow business secretary Rebecca Long-Bailey with a range of measures – including stopping Post Office closures.

Sky News can reveal Labour would draw up a register of landlords of empty shops in every local authority.

And the party would deliver free public wi-fi in town centres, for those having a coffee or working in community spaces.

The plans are due to be announced on Tuesday by Ms Bailey at Labour’s autumn conference in Liverpool.

She is aiming to boost support for the party in British towns, as leader Jeremy Corbyn suggested a general election could be called imminently.

Brexit secretary Dominic Raab insisted on Sunday that “it’s not going to happen”.

Research by Which? published in June found that the free-to-use ATM network was “under threat”.

The idea to ban them was championed by Labour MP Ged Killen, who welcomed the party’s announcement.

“No one should ever have to pay to access their own money,” he told Sky News.

“If any government is serious about economic development in our towns and high streets they need to protect the financial infrastructure people and business rely on.”

The other plans would see post offices owned by the government stopped from further franchising and closing.

Under-25s will also get free bus travel in local authorities where local bus services are either franchised or publicly owned.

Labour has also promised to “work with” councils to extend wi-fi roll-outs by commercial developers in public spaces.

And it will force shop landlords to make their identity and contact details public, creating an empty shop register to “make it easier to bring empty units into use”.

A new annual business rates re-evaluation will also be introduced. …”

https://news.sky.com/story/labour-would-scrap-atm-charges-in-bid-to-save-high-streets-11507872

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8 Sep 2018

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Business Rates, East Devon economy, Small and Medium businesses

“Business rates ‘to blame for high street decline’ “

“The boss of Tesco has warned that if the government does not reform business rates soon it will have contributed to the decline of high streets across Britain.

Dave Lewis, chief executive of the country’s largest supermarkets group, said: “A decision not to reform business rates by the government will be a statement of policy.

“It will be a deliberate decision not to support the retail industry. We believe businesses should pay taxes, as it is the responsible thing to do, but should the government be laying a heavier burden on a shrinking industry?” He said that the government was in danger of “overmilking” the retail industry through “completely disproportionate” and excessively high business rates and risked damaging the sector.

Business rates — a tax linked to the value of property that a business occupies — have become an increasingly fractious issue in the retail industry as traditional bricks-and-mortar operators labour under a tax burden not shared by online-only rivals.

Tesco’s rates bill is almost £700 million. The total annual business rates tax take for the Treasury is £30 billion. Mr Lewis said that while corporation tax had fallen [from 28 per cent to 19 per cent since 2010], inflation-linked business rates, which hit the retail sector harder than any other, had increased.

“Business rates have gone up while corporation tax has gone down very significantly and that is very different to everywhere else. The UK has the second highest property-based tax in the Organisation for Economic Co-operation and Development at 4.5 per cent [of the total tax take]: it is only 1 per cent in France and Germany,” he said. “The approach of most of the countries in the OECD is to tax businesses on their profitability and to help businesses with investment, but business rates is a tax on any investment I make in my stores.”

Mr Lewis, who is in the middle of implementing a turnaround at Tesco, said in 2015 that retailers faced a “lethal cocktail” of rising taxes and costs at a time of falling profits. Yesterday he said that distress on the high street, where House of Fraser recently failed, showed his prediction was coming true.

Although the Treasury has made some revisions to business rates to ease pressure, Mr Lewis said that it had tinkered around the edges, despite the fact that British retailers made a huge contribution to the economy by generating employment and wider consumer spending, particularly in rural areas “where there might not be much else going on”. A recent study by KPMG estimated Tesco that contributed £37.3 billion in gross value added to the economy, a third of the construction sector’s total GVA in 2016.

There are growing calls for a tax on sales generated by online-only retailers. Mr Lewis said that if retailers were struggling to pay rates because their sales had fallen, “you need to look at where those sales have gone and if they are being taxed in the same way”. He said that a tax on online sales without a reform of business rates would result in a “double whammy” for retailers with stores and online divisions.”

Source: The Times (pay wall)

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6 Sep 2018

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Business Rates, High Street decline, Transport (local)

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“Every town centre should have free parking to encourage Brits to return to the high street, new report says”

“ALL town centres should have free parking in a dramatic intervention to help save the high street, a major report says today.

In a five-point strategy the Federation of Small Businesses also calls for urgent measures to halt thousands of ATM and bank branch closures that are crippling local firms and driving people away from town centres….”

https://www.thesun.co.uk/news/7191097/every-town-centre-should-have-free-parking-to-encourage-brits-to-return-to-the-high-street-new-report-says/

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10 Aug 2018

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Accountability, Austerity cuts, Business Rates, Economy, Health and Social Care (local), Local Government Finance, Post-Brexit Adjustments

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“Councils anticipate cutting services to ‘legal minimum’ “

Owl says: But this was always the ambition of Conservatives who much prefer “the big society” (charities and volunteers providing services) and “the small state” (councils providing minimum services). We should not be surprised at that – it is what their voters vote for. But what we SHOULD be surprised at is that it is taking MORE of our money to achieve this, not less.

Labour councils are most pessimistic (83% believe this vill happen within 5 years), as they should be, as they are generally in poorer areas and/or the North where reliance on business rates (which will be the main source of council revenue with council tax) will be tricky, particularly in a post-Brexit economy. But Tory councils, even those in business rate-rich areas are also pessimistic (63%).

A sorry state of affairs to look forward to if this government remains in power: higher taxes, lower (rock bottom) services.

“Two-thirds of councils believe they will only be able to deliver minimum services required by law within five years.

The results of a survey by the New Local Government Network (NLGN) comes as Northamptonshire County Council voted through an action plan to cut services to the bone in order to tackle a likely budget deficit for this year of up to £60m–£70m.

NLGN’s second Leadership Index survey found that councils with social care responsibilities are the most pessimistic, with 88% indicating they will be unable to deliver discretionary services by 2023.

Adam Lent, director of the NLGN, said: “This should be a sober wake-up call for a government that is overseeing a country with ever deepening social divisions and growing inequality.

“Councils are best placed to tackle these problems, and should be receiving greater investment to do this, not seeing their services stripped to the bare minimum.”

Lent said areas stripped of libraries, park maintenance, pothole repairs and advice to residents on care, or housing, were likely to see a narrowing of opportunity for residents.

The survey was carried out from 7th June to 2nd July, with 191 council leaders, chief executives and mayors replying.

Labour-run councils are the most pessimistic with 83% predicting that discretionary services will disappear by 2023, compared to 63% of Conservative-run authorities.

Northamptonshire, on Thursday afternoon, approved an action plan that agreed “spending priorities”. These include safeguarding vulnerable children and adults. Also in the plan is a review of contracts with third party suppliers. Around 70% of Northamptonshire’s services are delivered through external suppliers.

Paul Carter, County Councils Network chairman and leader of Kent County Council, said: “It is clear that unless government finds a long-term solution to council funding and a fairer distribution of resources between authorities, other well-managed county councils could find themselves unable to balance the books.

“The new secretary of state for local government recognises the situation we face, but the Treasury needs to better understand the pressures we are under and support counties with short-term resources for the next financial year, ahead of a longer-term deal in the spending review.”

Northamptonshire will also review its external contracts, including Private Finance Initiative Schemes, as well as its capital programme.

Before the meeting, Andrew Lewer, Conservative MP for Northampton South, tweeted that the county council’s “problems are national as well as local”. He revealed he has written to communities secretary James Brokenshire and health secretary Matt Hancock to request a meeting about the authority’s position.

Pressure on the government to provide further assistance to Northamptonshire also came from Anne Longfield, children’s commissioner for England, who tweeted that her organisation was “writing to ministers asking for them to also ensure no vulnerable children are put at risk by cuts to services”.

It also emerged this week that East Sussex County Council last month agreed plans to reduce services to the bare minimum required by law.

Becky Shaw, chief executive, said: “Careful planning, efficiency savings, innovation, hard work and commitment to our four key priorities have enabled us to make the best use of our dwindling resources, but the pressure created by local residents’ needs cannot be met by income raised locally.

“Having transformed our services and saved £129m since 2010, we need to be realistic about what further budget cuts will mean for the residents, communities and businesses of East Sussex.

“Our core offer paints an honest picture of the minimum that we realistically need to provide in the future and we want to use this as the basis for discussion with the government, partner organisations and residents in East Sussex.”

The Times reported this week that the chancellor, Philip Hammond, has told non-protected departments, including the Ministry for Housing, Communities and Local Government, to earmark further cuts before next year’s spending review.

Some departments believe that these budgets could be cut by as much as 5%, according to the report.”

http://www.room151.co.uk/funding/councils-anticipate-cutting-services-to-legal-minimum/

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31 Jul 2018

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Austerity cuts, Business Rates, Economy

“Next CEO Lord Simon Wolfson says business rates accelerating ‘process of failure’ on the high street”

Lord Wolfson does not mention a transaction tax on online purchases – not surprising as Next has a big online presence too.

“The chief executive of Next has called on the government to reform business rates, which he says are accelerating the rate at which high street shops close.

Lord Wolfson, a Conservative Party peer, says the tax on commercial property has not been updated to reflect the increasing popularity of online shopping and needs changing.

“The one thing that I think the government must do is make rates more responsive to today’s reality,” Simon Wolfson told ITV News.

“Let the thriving towns and cities, we should be paying high rates, but the ones that are dying, actually that process of failure is being accelerated by rates that are stuck at levels that don’t reflect today’s reality”. …”

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7 Jul 2018

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Accountability, Austerity cuts, Business Rates, Conflict of interest, Small and Medium businesses

“Companies got just £21million relief from business rates this year as councils are urged to do more to help ailing high streets”

Owl says: You want to see a conflict of interest in action? Here’s one. Should a council agree to business rate reductions to save their high streets and see their own revenue fall – or should they let the shops die to preserve their income? (Empty shops usually get 3 months free of business rates then have to recommence them even if the shop remains empty).

“Councils are failing to use their powers to cut business rates and help struggling local shops survive.

Local authorities can reduce rates if it is felt necessary to rejuvenate town centres, using rules under the 2011 Localism Act.

But analysis by the Altus Group consultancy reveals that this almost never happens. There were only £21million of reductions in this financial year – or 0.08 per cent of the predicted total £24.8billlion rates bill in England.

Although business rates are set by an independent government body, half the tax raised goes to councils.

Critics warned that their short-term focus on raking in money could end up destroying town centres weighed down by huge tax burdens.

The 50 per cent of rates that councils keep is meant to come with a more responsible attitude to businesses, with authorities cutting taxes where necessary to help firms.

But instead of going down, rates are constantly ratcheted up. Department stores have been hit with an average increase of nearly £151,000, or 27 per cent, in the past two years, while small shops have seen average rates climb 9 per cent to £9,623.

Sam Dumitriu, of the Adam Smith Institute, a think-tank, said: ‘Councils would rather prioritise their chief executives’ salaries over lessening the burden on businesses. There needs to be quite radical reform of rates to support businesses.’

Mike Cherry, chairman of the Federation of Small Businesses, said: ‘Local authorities must get to grips with the dire situation currently sweeping the high street and start backing hard-working retailers being hit hard by crippling rates bills.’

Robert Hayton, head of business rates at Altus, said: ‘Despite the ongoing crisis engulfing our high streets, this year councils in England are planning just £21million in additional help.

‘Given the stream of collapses across the retail and hospitality sectors since the turn of the year – and with many others teetering on the brink – councils could take decisive action now.’

The Daily Mail’s Save Our High Streets campaign is calling for business rates to be reformed, car parking charges to be slashed and huge foreign technology companies such as Amazon to be fairly taxed.

Around 50,000 retail staff have lost their jobs this year and almost 61,000 stores closed between 2012 and 2017 as internet retailers ruthlessly out-compete traditional bricks and mortar companies.

The Local Government Association, which represents councils, said: ‘Councils do what they can to help small businesses and local economies.

‘This is increasingly difficult, with local government in England facing an overall funding gap that will reach almost £8billion by 2025 and growing demand for services.’ “

http://www.dailymail.co.uk/news/article-5927309/Companies-got-just-21million-relief-business-rates-year.html

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3 Jul 2018

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Accountability, Austerity cuts, Business Rates, Infrastructure, Planning System, Small and Medium businesses, Transport (local)

“PARK AND THRIVE Councils urged to slash parking fees to £1 in a bid to rescue failing town centres”

“GREEDY councils were last night urged to slash high street parking rates to a token £1 to stop town centres turning into “ghost towns”.

A retail veteran said town halls should introduce the nominal charge for the first two hours of parking in a radical 25-point plan to revive the retail sector.

The charging regime could be backed by Government legislation.

Bill Grimsey – ex boss of Wickes and Iceland – also demanded the “broken” business rate regime be scrapped altogether as he blamed the eye-watering tax for the biggest wave of shop job losses since the credit crisis.

He called for business rates to be replaced by a 2 per cent sales tax that would cover “bricks and mortar” chains such as Tesco as well as online giants such as Amazon.

And he called for Theresa May to create a new Town Centre Commission to develop a 20-year strategy.

He said: “The first six months of 2018 have seen the highest rate of retail closures, administrations for more than a decade and there is no sign of a slowdown.

“Our cities, towns and communities are facing their greatest challenge in history, which is how to remain relevant, and economically and socially viable in the 21st century.”

Speaking at the Local Government Association today, the retail veteran will say the days of shops ‘anchoring’ high streets were now gone as shopping habits change.

And he called on Government to change planning laws to bring in more housing and offices.

Libraries and public spaces should be at the heart of each community, Mr Grimsey said. He added that the vacancy rate – or proportion of empty shops – in towns such as Morecambe was now 30 per cent.

Councils trousered a whopping £820 million-worth of profit from parking and fines in 2016-2017.

The Local Government Association claims the so-called parking charge surplus is spent on “essential transport projects”. But a report in April ranked Britain’s roads 27th worst in the world – below Chile, Cyprus and Oman.

Under Mr Grimsey’s plans, councils would charge a nominal £1 for the first two hours of parking in town centres – while introducing 30 minutes free parking in high streets.”

https://www.thesun.co.uk/news/6689229/council-bid-slash-parking-fees-town-centres/

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9 Jun 2018

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Austerity cuts, Business Rates, Economy

“Retail space returned to landlords in high street crisis, Colliers International reveals”

Owl says: would Tesco be calling for a “level playing field” between high street and online shopping if they had not just closed Tesco Direct – their online retailer!

“Retail space equivalent to about 180 football pitches has been handed back to landlords this year, in a stark sign of the challenges facing the high street.

A day after House of Fraser announced that it would be closing more than half of its stores, an analysis by Colliers International shows that 11.6 million sq ft of retail has been “lost” to administrations, company voluntary arrangements and planned store closures this year.

The property consultancy said that this included the two million sq ft of retail space that Marks & Spencer planned to offload by closing 100 stores.

Fears are growing for the future of high streets as more retailers struggle and try to close stores through CVAs — the contentious insolvency process that allows retailers to shut shops and cut rents at landlords’ expense. New Look, Carpetright and Mothercare are among those that have entered into CVAs this year and House of Fraser’s proposed CVA has infuriated many in the property industry. The British Property Federation, which lobbies for landlords, has called for an urgent inquiry into the practice.

However, retailers say that they are facing a toxic mix of high rents, rising wages and costs and a structural shift in the industry as more people shop online. Yesterday, Dave Lewis, chief executive of Tesco, told the BBC that the burden of business rates, which hits retailers with large store estates hard, was to blame for many of the present woes.

He said that Tesco paid more than £700 million a year in business rates and that “you need a level playing field . . . between an online digital world and a traditional retail store base model”.

Dan Simms, co-head of retail agency at Colliers, said that the retail space at risk of closure this year was already more than the 10.7 million sq ft handed back in 2016, the year BHS collapsed.

“What we are seeing now are a lot more retailers closing stores,” he said. “It is much more broadly based so it feels like things are markedly worse.”

Analysis by Harper Dennis Hobbs shows that about 25 million sq ft of retail space was lost between 2008 and 2010 …”

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3 Jun 2018

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Accountability, Affordable and Social Housing, Business Rates, Developers/ Development, Small and Medium businesses

Only in the Sunday Times …

… would you find an article with the headline:

“Small businesses at risk from house price fall”

about small business owners using their homes as collateral.

Might a headline in the Daily Mirror read:

“Small business owners forced to use houses as collateral as big banks fleece them with high interest rates and government fleeces them with high business rates”!

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2 May 2018

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Accountability, Asset sweating, Austerity cuts, Business Rates, Council tax, EDDC

“Trying to maximise income purely from commercial revenues is NOT what the public want.”

CIPFA chief executive Rob Whiteman has told a conference this morning”

“… At some point in the next 15 – 20 years local government needs to be reorganised. We need to be aware reorganisation would be a good thing.”

But he predicted there was unlikely to be “any meaningful local government reform” for some time.

Local government must rebuild trust with the public, Whiteman told his audience. “In its present form, local government is not perfect.

“I do not think that trying to maximise income purely from commercial revenues is what the public want.”

Don Peebles, head of CIPFA UK policy and technical, echoed this, suggesting local government’s commercial investments should be more about keeping council finances afloat rather than maximising profit.

He said recent changes to the prudential code – the statutory guidance for local government on borrowing and investments – reflected that “the priority is not maximisation of return but the protection of capital”. …”

https://www.publicfinance.co.uk/news/2018/05/local-government-uncertain-place-10-years

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27 Apr 2018

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Accountability, Austerity cuts, Business Rates, Inequality, Small and Medium businesses

“Staircase tax” WILL apply to business rates despite government promise to drop it

Owl says: so nos small businesses will get their own version of the council house “bedtoom tax” …

“Housing minister Dominic Raab has confirmed a government u-turn on a budget promise to compensate councils for the new “staircase tax” resulting from a 2015 Supreme Court ruling on business rates.

In last year’s budget, chancellor Philip Hammond announced that businesses would be able to claim a rebate on bills based on the way they were calculated before the ruling – backdated to 2010.

However, speaking in the House of Commons this week, Raab said that the government no longer intended to honour this promise.

“I do not think it would be right to compensate local authorities for what would effectively be an inadvertent windfall resulting from a judicial determination,” said Raab. “From the point of view of government policy, that was not something we wanted to see, and we have moved as swiftly and reasonably as we can to correct this.”

The Supreme Court ruling reversed more than 50 years of practice that businesses operating in separate units, or rooms, accessed from a connecting staircase received a single rates bill.

Following the judgement, the Valuation Office Agency has changed its practice to issue separate bills for each floor — with businesses able to claim a rebate back to 2010.

This means that some rates payers previously eligible for small business rates relief have lost some, or all, of their relief.

In addition, rateable value per square metre is sometimes lower for large properties due to landlords offering discounts to fill space.

Raab said that only a small number of businesses — fewer than 1,000 — are affected adversely by the change.

Raab made his announcement on Monday, during a debate on the tax, held during the second reading of the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill.

Also speaking in the debate, Clive Betts, chairman of the housing, communities and local government select committee, said: “We accept that the legislation takes the position back to what people thought it was before the court decision.

“In the meantime, however, we have had the court decision and local authorities will have done their estimates based on that decision, so the government are effectively changing local authorities’ financial positions from what they thought they would be a few months ago.”

Raab said that local authorities had been informed of the change of direction “as soon as was reasonably possible”.

In a briefing criticising the u-turn, the Local Government Association said: “It is disappointing that the government has reversed their autumn budget decision on the financial implications of this measure, and has indicated that no compensation will be payable to local government.

“We support the housing, communities and local government committee’s recommendation that the government needs to reassure councils that they are not going to be worse off financially because of this legislation, and that the government should bear the associated costs as a result of the reforms.”

http://www.room151.co.uk/funding/government-u-turns-on-staircase-tax/

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26 Apr 2018

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Accountability, Business Rates, Hugo Swire, Sidmouth/ Sidford/ Sidbury

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Swire too busy with Brexit to meet with worried Sidmouth businesses

“A meeting to discuss worries about rising business rates and other issues facing Sidmouth’s high street has been cancelled.

Businessman Steve Clark, of Rendevous, told the Herald that today’s (Thursday) event is called off as Sir Hugo Swire was not able to attend due to his Parliamentary commitments. …

Sir Hugo said he was unable to attend due to discussions on future trading post Brexit. …”

http://www.sidmouthherald.co.uk/news/business-meeting-on-issues-in-sidmouth-high-street-cancelled-1-5493005

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13 Apr 2018

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Accountability, Austerity cuts, Business Rates, Health and Social Care (local), NHS (local), Privatisation

“Hospitals launch legal challenge over rates relief”

“A group of 20 NHS hospital trusts has launched a legal challenge for business rates relief. The trusts have started legal proceedings against 49 local authorities who want to be treated the same as private hospitals for relief on business rates bills. A preliminary hearing took place yesterday. The LGA is supporting councils involved in the case. …”

Source: Mail Online, Express p5

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27 Mar 2018

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Accountability, Austerity cuts, Business Rates, Cranbrook, East Devon Growth Point, EDDC, Greater Exeter, Inequality

EDDC to borrow a minimum of £3.4 million and up to £8 million to “improve” Greater Exeter enterprise zone

Owl says: it seems western East Devon/Greater Exeter is to thrive at the expense of eastern East Devon; more of everything for Greater Exeter, less of everything for Lesser East Devon.

“Improved bus services, a new park-and-change car park, and improvements to Exeter Airport are all on the cards.

East Devon District Council’s Cabinet is being asked to approve borrowing of nearly £3.5m to help accelerate the projects in the Enterprise Zone.

The Exeter and East Devon Enterprise Zone consists of the Exeter Science Park, the Skypark, the Exeter Airport Business Park and Cranbrook Town Centre.

A report to the cabinet is seeking approval for £3,391,250m to be borrowed against future ring-fenced business rate income.

The report, that goes to the Cabinet on Wednesday, April 4, written by Naomi Harnett, Enterprise Zone Programme Manager, says: “While not yet fully developed and appraised it is considered that these projects are also likely to make a substantial contribution to the achievement of the objectives of the Enterprise Zone.

“The Enterprise Zone designation is a powerful means of accelerating the delivery of new commercial space and jobs in the four sites in the West End of the District.

“The more that can be done to accelerate the delivery of new commercial space the greater the impact there will be both in terms of business rate income and wider economic benefit. Work has focused on developing projects that help to overcome identified barriers to delivery and/or have a catalytic impact in terms of accelerating the pace of new commercial development.

“Approval is sought for the funding of an initial set of projects that are considered to contribute substantially to meeting the objectives for the EZ.”

The report seeks approval for £3,391,250m to be borrowed against future ring-fenced business rate income.

The four proposals that the council is being asked to invest in are:

1 – An enhanced frequency bus service (30 minute at peak) connecting Exeter to the Enterprise Zone area. This includes connections via the key transport nodes of Exeter St Davids and Exeter Airport. The service is due to commence at around 5am and run through to 11pm, with the intention that this fits with key shift patterns and flight times. Some of the services will also continue to Woodbury and Exmouth. The service builds on an existing service tendered by Devon County Council and the intention is to subsidise this for an initial period of 3 years starting from Summer 2018. The scheme would cost £536,250 and would be delivered by Devon County Council.

2 – A 309 space park-and-change car park located at the Exeter Science Park, alongside bike lockers and an e-bike docking station. The facility will both support the development of the Science Park and contribute to the wider transport strategy for the area. It is anticipated that the works will complete during summer 2019 and be delivered by Devon County Council, and would cost £2.4m

3 – An upgrade to the Exeter Airport Instrument Landing System. The current system installed in 1997 has now reached the point where there is no further operational tolerance to accommodate additional nearby development. Subsequently this is a significant barrier to development coming forward particularly at both Skypark and the Airport Business Park extension. The scheme would be delivered by Exeter Airport and cost £1.4m

4 – An upgrade to Long Lane, the road that runs immediately to the south of the airport. It is the principle means of access to the Airport Business Park extension and is sub-standard to the point where no further development can proceed until it is improved and is therefore a significant barrier to one of the four EZ sites coming forward. An initial sum of up to £100,000 is sought in order to complete the scheme design and would be delivered by Devon County Council.

The investment in the enhanced bus service and park and change facility would be in the form of a grant, and a forward funding mechanism is proposed to secure the timely upgrading of the Instrument Landing Systems at the Airport. The costs of this can then be recouped as development proceeds.

The report also request that the cabinet agrees the principle of borrowing up to £8m against ringfenced business rate income to fund the delivery of projects and makes this recommendation to Council

Further papers setting out specific investment proposals in relation Cranbrook town centre and Exeter Airport would come to the Cabinet at a later date.

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1 Mar 2018

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Accountability, Austerity cuts, Business Rates, East Devon economy

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The business rate retention scam

“Allowing English councils to retain more of their business rates revenue could lead to damaging shortfalls in funding and drive divisions between different areas, the Institute for Fiscal Studies has warned.

Councils that enjoy the biggest increases in such revenues are unlikely to be those with the biggest spending needs, the think tank said. Levelling the playing field by redistributing the money would address regional disparities but would undermine the goal of encouraging councils to use business rates to boost regional growth.

The government turned the business rates system on its head in 2013 as part of its devolution strategy, when local authorities were allowed to keep half of any real-term growth in revenues or bear half of any real-term fall. Until then, business rates were pooled by central government and distributed back to local authorities as grants.

Five years ago, the ambition was for councils to keep 100 per cent of the change from 2019. That has been revised down to 75 per cent from 2020. The idea was to give local authorities an incentive to boost their revenues and local economies by increasing commercial property development or by cutting rates to attract more business.

The IFS said that the plan may backfire and “lead to divergences in English councils’ funding without promoting growth”. Its analysis of councils’ revenues and spending since 2006 showed that the policy may be flawed.

“The report shows that significant divergences could arise in just a few years under 100 per cent rates retention,” the IFS said. “This is because those councils, which would have seen the biggest increases in their retained business rates revenues, were often not the councils that experienced the biggest increases in their relative spending needs, for example, because their population became older, poorer or sicker.

“It is also not clear that the incentives provided by rates retention will translate into faster economic growth. The report finds no relationship between changes in the councils’ business rates tax bases and local economic growth, or indeed employment or earnings growth, in recent years.”

David Phillips, associate director at the IFS, said: “Areas seeing lots of new developments aren’t guaranteed strong economic growth. And growth doesn’t necessarily rely on large-scale property development.”

Source: The Times (pay wall)

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29 Jan 2018

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Austerity cuts, Business Rates, Economy, Misc, Small and Medium businesses

“Business rates hardship fund proves ‘false hope’ after more than £70m delayed”

“A relief fund worth £300m set up by Philip Hammond, the Chancellor, to support small firms struggling under the weight of business rates rises has proved a “false hope” after failing to pass on tens of millions of pounds 300 days after its launch.

Research by Gerald Eve, the property consultancy, has found that more than £70m of the £175m allocated to councils for the year to March 2018 has yet to be passed on to local firms.

The Federation of Small Businesses said some of its members were still waiting for the essential funding.

“Our research showed that one in five firms facing business rates hikes were planning to sell, hand-on or close their business,” said Mike Cherry, the chairman. “The Chancellor’s £300m hardship fund offered a small glimmer of hope. For many, it’s proved to be false hope.” …

http://www.telegraph.co.uk/business/2018/01/29/business-rates-hardship-fund-proves-false-hope-70m-delayed/

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20 Dec 2017

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Business Rates, Council tax

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Council tax: up to £100 year increase (for fewer services) and Devon to retain 100% business rates

“Local authorities are to be allowed to raise council tax by up to 5.99% next year, after a further relaxation of the government-imposed cap to address shortfalls in funding for social care.

Families across the UK could see their bills rise by up to £100 a year as a result of the announcement, which will also see councils increasing the charge without holding local referendums.

The move, which has been widely criticised and called “woefully inadequate” by leaders in the social care sector, could see the average band D council tax bill rising to £1,653.30. …. “

https://www.theguardian.com/society/2017/dec/19/council-tax-bills-could-rise-100-a-year-government-relaxes-cap-sajid-javid

In a separate announcement, the DGLC announced that a pilot project will see 10 areas retain their full business rate contributions:

“Communities secretary Sajid Javid has today announced a shake-up of the formula for distributing funding to local authorities.

He has also set out plans to allow councils to retain 75% of their business rates and a 1% increase in council tax raising powers, revealing the local government settlement in the House of Commons.

Javid confirmed plans to end the revenue support grant and allow councils to retain 100% of local business rates by 2020 would be put on hold, over concerns that some councils could be left out of pocket.

Instead, he said there needed to be an “updated and more responsive distribution methodology”, and that councils would be allowed to retain 75% of business rates by 2020/21.

He said: “I am today publishing a formal consultation on a review of relative needs and resources. “I aim to implement a new system based on its findings in 2020/21.”

In addition, he announced 10 further councils would be taking part in a pilot to retain 100% of their business rates. …”

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21 Oct 2017

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Business Rates, Economy, Small and Medium businesses

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Would you start a new small business these days?

“More than 56,000 small businesses in England will face steep tax rises next year, research indicates.

Business rate increases will total £152m in April, rates specialist CVS said, putting a heavier burden on firms already reeling from rising inflation.

The prediction follows a drop in retail sales last month as inflation hit its highest level in more than five years. “For many shops, this may be the last straw,” said Helen Dickinson, chief executive of British Retail Consortium. “Across the country, especially in economically deprived and vulnerable communities, the cost of failing to take action will likely be seen in yet more empty shops and gap-toothed High Streets,” she added.

CVS says its research shows that 37,364 small shops will see their business rates bills rise above inflation next April, with 30,198 small shops facing rises in their rates bills of between 10% and 14.99%.

Business rates are a property tax based on rental values. The rates increase annually, in line with September’s Retail Prices Index, a measure of inflation. The ONS this week said the RPI rate of inflation had reached 3.9%.

Meanwhile, the UK’s key inflation rate climbed to 3% in September, driven up by increases in transport and food prices. The pick-up in inflation raises the likelihood of an increase in interest rates – currently at 0.25% – in November, the first rise in a decade.

Tighter belts

“Brexit is driving inflation,” CVS chief executive Mark Rigby said, urging the chancellor to be “bold” in his November Budget and freeze inflationary rate rises in 2018. “Import prices have risen given the fall in the pound with prices rising faster than wages, causing households to tighten their belts on spending, especially on big ticket items,” he added.

The Treasury periodically changes the rateable value of business properties to reflect differences in the property market, a process known as revaluation. Under the latest revaluation, which came into effect on 1 April, “transitional relief means big increases to bills are phased in gradually over the five years of the tax regime,” according to CVS.

In March, the government announced £435m in support to firms facing the steepest increases in bills following the revaluation. The package, which came after £3.6bn in transitional relief, included capping the increase in bills of 16,000 small businesses to £50 a month this year.

‘Heads in the sand’

“We are delivering the biggest ever cut in business rates to businesses across the country,” a Treasury spokesperson said. “The almost £9bn package will see a third of all businesses pay no rates at all and will mean nearly a million companies will see their bills cut,” they added.

CVS says fewer than half of all councils in the country have revised business rate bills after the introduction of the relief package in the spring Budget. “Ministers mustn’t bury their heads in the sand,” BRC’s Ms Dickinson said. “In his Budget next month, the chancellor needs to get a grip on the matter and rule out a rise in business rates to help save shops, protect jobs, and preserve high streets.”

http://www.bbc.co.uk/news/business-41693417

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13 Oct 2017

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Accountability, Affordable and Social Housing, Austerity cuts, Business Rates, Developers/ Development, Economy, Housing (local), Independent Councillors

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What is the view of independent councillors at the Local Government Association?

“Dear colleagues,

It has been good to see so many of you this month at our Group Party conferences and at the National Conference of Children and Adult Services. We also ran the first module of the Next Generation leadership course. All this adds skills and knowledge to the many talents of our [Independent] members and enables us to discuss issues and craft better solutions. The regional meetings also start shortly in every area, so we shall soon be at a place nearer you to hear your views first hand. Thank you to those who made it to the recent information and development seminar on campaigning, either in person or online in the webinar.

English councils have taken a reduction of £16m in Government Grant funding from income tax, only partly offset by the 50 per cent retention of local business rates. 166 councils will be expected to pay the Government instead, further centralising money and power, exactly contrary to the agreed direction. The LGA is working hard on this in their Budget submission. 97 per cent of councils signed up to the four year agreement, but on the promise that 100 per cent of the business rates would be retained in local government, now a broken promise. If you are one of the 166 councils, have you passed a motion to seek a better deal? Please let us know.

It leaves us short of funds to run services and makes it hard to support more people with increased housing. We have called long and hard for powers and funds to build the houses people can afford. It is bizarre that councils can borrow to build a swimming pool or a hotel, but not for much needed housing, regardless of a sound business case.

Instead of lifting this cap, Theresa May has announced a £2bn fund for social and/or “affordable” housing. If you rely on the media it is unclear whether this is intended for affordable or social housing. For example, the Sky News headline refers to affordable housing while the Guardian headline refers to social housing. Whichever it is for, it is only available to some councils and then only through a bidding process, ratheru than just giving us the funds. Her calculation of 5,000 homes a year, is based on an £80,000 subsidy per dwelling, but in areas of greatest demand, where she says she wants to direct the funding, that will fall woefully short. In its budget submission, the Chartered Institute of Housing recommended an extra £1.5bn every year to build 28,000 homes.

Sadly, although genuine funds are always welcome, the fund announced by the PM will not tackle the problem. We cannot plug the housing gap while the “right to buy” continues to drain our resources. In many councils, these have almost doubled this year, each sale taking two thirds of the value out of the public purse and into central government and private hands. We have to start to limit these expensive donations to what we can afford.

We cannot flood the market to bring house prices down while demand is unrestricted. Anyone in the world can buy here, and they do. Like a foreign holiday home, the first sale brings money into the community, but after that sales are often passed from one absent owner to another and sometimes left empty – more a place to house funds, rather than people.

We cannot make housing affordable while rents spiral without restraint and “affordable” is not linked to income, but to 80 per cent of commercial value. Many people will obviously continue to struggle. A housing rent statement is expected to confirm the move back to a maximum of 1 per cent above the consumer price index.

Meanwhile, homelessness is rising. I visited EMMAUS which provides an en suite room, regular meals, a community and a job for 720 homeless people. But it uses Housing Benefit that is about to be swallowed up in Universal Credit, an issue colleagues and I have raised at all levels. Our Vice President, Lord Victor Adebowale, CE of Turning Point was on Twitter this week supporting the work of community enterprise.

Greg Clarke, one the most thoughtful of our Ministers, responded brilliantly to my question recently, pointing out that growth could be an empty target if it did not provide balanced communities with work and housing to match.

However, DCLG has a consultation out now about increasing the pressure on councils to give permissions for housing, regardless of local ability to provide jobs, services, infrastructure such as roads and schools, and regardless of land availability without damage to the environment. Our Group’s Deputy Chairman, Rachel Eburne, is on the LGA board for the Environment, Economy, Housing and Transport. She pointed out that the cross party board was unanimous in its objection to the centralised steamroller approach.

The LGA has sought powers to prevent land-banking that prevents houses being built, while councils are required to compensate by giving ever more permissions, making a mockery of a planning system which is prevented from planning ahead. DCLG has not chosen to put any pressure on the developers to get on with it, despite our calls to give councils the ability to step in. Also the viability studies remain obscure and enable developers to reject the much-needed contributions to affordable housing or infrastructure. We cannot just look at housing on its own. It must be linked to economics, environment, and sustainability.

Leader of the Independent Group
Vice Chair of the Local Government Association
Lincolnshire County Councillor and North Kesteven District Councillor”