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

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)

Reuse, repurpose, refurbish: “The rise of the ‘meanwhile space’: how empty properties are finding second lives”

“Hospitals are rarely places of cheer and creativity, but the former Saint-Vincent-de-Paul hospital in Paris’s 14th district is one of the most exciting places on the left bank. Former ambulance bays and car parks now house allotments, a boules court, a makeshift football pitch and an urban campsite, and up to 1,000 visitors a day come to browse its market, eat at its cafes or catch a free live performance.

Renamed Les Grands Voisins, or The Great Neighbours, the site is a magnet for Parisians and tourists alike, its former treatment rooms, A&E building and wards now a hub of social and commercial enterprise. Alongside a hostel providing 600 beds for the homeless are artisan studios, pop-up shops and startups.

It’s like a village, an inclusive space with social areas and job opportunities where different people can interact,” says William Dufourcq, director of Aurore, the charity that runs the homeless shelter. “We were overwhelmed with its success.”

Closed since 2011, the hospital is slated for redevelopment into a new neighbourhood with eco credentials, private and social housing, shops, commercial and public facilities and green space.

Planning, clearance and construction on such a large scale takes time and, rather than leave the 3.4-hectare site empty for years, the developer, Paris Batignolles Aménagement, opened it to local organisations rent-free. The lease was scheduled to end this year, but has been extended until mid-2020 while construction begins on other parts of the site.

Les Grands Voisins is an example of a “meanwhile space”: a disused site temporarily leased or loaned by developers or the public sector to local community groups, arts organisations, start-ups and charities. Calls for making use of such spaces in other crowded urban centres are getting louder. A report published in October by the thinktank Centre for London highlights both the need for and positive possibilities of utilising empty urban sites and how this could transform the landscape of cities around the globe.

“The aim was to show the value ‘meanwhile use’ can add in cities where there is pressure on space,” says Nicolas Bosetti, one of the report researchers. He says public and private operators in Paris are more ambitious than those in London in exploring the use of disused buildings from metro stations to former nightclubs for short-term use as charity and cultural venues.

Other meanwhile spaces in Paris include Exelmans, a former police residence repurposed as a shelter for the homeless and refugees, run by Aurore on a two-year lease, and the Parmentier electricity substation, where the art collective La Générale has operated since 2008.

The substation, which is soon to be redeveloped, was included in Paris Reinvented, an initiative from the mayor’s office currently in its second year. Disused public sites are put up for auction to developers and architects who compete with plans for their redevelopment. “Les Grands Voisins showed how something like this can change an area and help plan future urban projects,” says Marion Waller, adviser to Paris’s deputy mayor for urban planning. “We didn’t want to sell buildings to the highest bidder but to the most innovative solution.”

The idea of loaning empty urban spaces to worthwhile causes is gaining ground elsewhere, with thriving projects in the Danish city of Aarhus and Philadelphia in the US, where it’s called “temporary urbanism”. However, in space-squeezed London, urban sites can remain empty for years, mainly because they have no obvious commercial potential or are waiting for permission to be developed.

The Centre for London found that an estimated 24,400 commercial properties in London are currently empty, with around half having been unused for more than two years. The total available vacant space, 6.5m sq metres, is equivalent to 27 times the footprint of Westfield London, Europe’s largest shopping centre. The majority of such places are owned by local authorities and developers. “Only one of 33 London borough councils publishes a database of vacant property and only one council keeps a list of groups interested in vacant spaces,” says Bosetti.

Bosetti thinks property owners could do more to match available sites with needy groups but says local authorities are afraid of squatters or allowing in destructive elements. “One of the main barriers to meanwhile use is the perception that hoarding a site is safer,” he says. “Often the opposite is true. Opening a site to a community and encouraging interaction with residents usually sees a reduction in antisocial activity.”

Squatting and vandalism are more likely if a building remains empty for too long, so one benefit of temporary tenants is the reduction in security costs. Another, according to Simon Hesketh, director of regeneration with the British developer U+I, is the connection a meanwhile space can forge with the community prior to redevelopment.

“We’ll try to organise events in temporary spaces for the widest cross-section of residents, to get their views and ask what they’d like and what works,” he says. “Not just to smooth the planning process, but because we can learn what we might include in our proposals.” …

https://www.theguardian.com/cities/2018/nov/28/the-rise-of-the-meanwhile-space-how-empty-properties-are-finding-second-lives

“Cash Machines Closing At A Rate Of More Than 250 A Month”

Rural areas and small businesses hit hardest:

“…A total of 76 protected ATMs – those which are located one kilometre or more away from one another – were lost in the period.

Of those, 43 had Post Office over-the-counter services available nearby while 12 could not be accessed by the public. Some 21 machines were shut down with no alternative access to cash.

The Federation of Small Businesses expressed concerns that the closures could hit small business owners in remote areas. …”

https://www.huffingtonpost.co.uk/entry/atm-closures_uk_5b993a88e4b0162f473313f0

“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)

Our LEP asked businesses about Brexit – probably not happy with answers

From the blog of East Devon Alliance DCC Councillor Martin Shaw (Seaton and Colyton):

“The Heart of the South West Local Economic Partnership (LEP) has belatedly published a report (dated May 2018) on local businesses’ views of Brexit.
This table shows answers to the question, ‘What is your overall assessment at this stage of the likely impact of Brexit on your business?’

POSITIVE (1)
NEGATIVE (9)
Neutral (7)
Mixed (6)
Don’t know (6)

The LEP summarises this table as ‘Businesses’ assessment of the overall impact of Brexit at this stage is quite varied.‘

VARIED? ONE BUSINESS OUT OF 29 THINKS ITS IMPACT WILL BE POSITIVE, COMPARED TO 9 WHO THINK NEGATIVE, AND THAT IS VARIED?

Other findings:

two-thirds of businesses have done no formal planning for Brexit

uncertainty is a big concern

the biggest specific concerns are about are changes to regulatory alignment [i.e. departure from the Single Market] and the speed of customs arrangements [i.e. departure from the Customs Union]

only 1 out of 29 expects it to be positive for their sector; 9 out of 29 expect it to be negative (the rest expect it to be ‘neutral’ or ‘mixed’, or don’t know)

This report (How firms across HotSW are preparing for Brexit, Report to HotSW LEP, Devon County Council and Partners) was prepared in March and April 2018, drawing on interviews conducted in February and March 2018, so it is already seriously out of date.

In the spring, businesses could reasonably have hoped for a deal:

What do businesses think now that May’s government has caved in to Rees-Mogg and ditched plans for a customs union with the EU?

What do they think of the ‘no deal’ scenario?

How are they going to cope if they still haven’t done the formal planning?
It isn’t difficult to guess. And why has this report been so delayed? Why wasn’t it reported earlier to DCC?”

Local Economic Partnership massages local businesses’ anxieties about Brexit: just 1 business out of 29 surveyed thought it would have a ‘positive’ impact, 9 said negative, many were worried – but that is just a ‘quite varied’ assessment according to the LEP!

“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