#BusinessRates announcement today – devolution to local council control – #CPC15

Today, at the Conservative Party Conference, George Osborne announced that councils will keep £26million of the business rates that they collect.  I’m very concerned about these changes. Whilst local control could be good I can see numerous pitfalls. However, more worrying is his assertion that the plan is designed to help councils boost their local high streets. Given rates are payable on vacant property (I can only assume that the chancellor knows this?!) I really can’t see what possible incentive there is for councils to encourage occupancy and support business growth… in fact the ONLY difference that can make to their revenue is to reduce it (through discounts and incentives they may well be expected to offer)!

If you’re not up to speed with this news you can read various features if you simply google “business rates” – however, here’s the article from BBC News http://www.bbc.co.uk/news/business-34445311

Business Rates and the Localism Act

My other concern is that under the localism act councils already had the power to offer discounts on business rates. In practice few could as they’d already had budgets culled so there was no spare cash to offer such incentives! I feel that this move gives local councils far greater responsibility but offers them no more resource to manage this new requirement. Putting onus on local councils, one might cynically wonder, simply absolves central government of all responsibiltiy. Not only will there be central savings in terms of resources previously allocated to the administration of business rates but now government have the ability to declare “Business rates are killing the high street – gosh, how awful – the problem is it’s nothing to do with us, it’s your local council who are responsible!”

Balancing business rates revenue centrally has some merit…

So, to me, these changes seem to be central government washing their hands of the job of administering business rates centrally. In so doing they are potentially burdening local councils who are already over stretched, under resourced, and facing continuing budget cuts.

Until now, local councils collected rates and sent a proportion back to central government. This pool of revenue was then reassigned out as part of all councils budgets / funding to deliver their key services. Clearly that proportion of funding allocation will now stop as central government can’t give out what they’ve not collected. Councils in areas with a high density of commercial property will get considerable revenue (whilst business rates are calculated based on a % of property value and property values are higher in high density areas), and may feel able to reduce rates. Councils in areas with far fewer businesses / commercial premises may struggle to get what they need (or what they get now) and may have to increase business rates to make up the shortfall.

Whilst it could be argued that redistribution of tax collected in areas with a high density of commercial premises to areas with few is unfair (in so much as one area funds another), it is also true that the highest proportion of small businesses are in smaller towns as they already can’t afford major metropolitan areas, not to do with rates specifically but to do with rents! If the government want to really help drive grass roots growth, helping small businesses and encouraging occupancy of vacant high street premises, implementing a scheme that makes it more achievable in high density locations where rent already prices-out most small businesses seems a little ill considered to say the least!

Encouraging councils to revitalise their high streets through devolution of business rates responsibility

Finally, Osborne claimed this move was going to encourage local authorities to support business growth. This could only work if empty commercial property incurred a reduced business rates bill… whilst landlords are liable to pay rates on vacant buildings there is no incentive. Only when revenue collected is directly linked to the property being occupied by viable, profitable trading businesses can councils be properly incentivised to “revitalise their high streets”. 

So, I love the sentiment but in implementation I have considerable reservations… let’s see how this plays out in practice!

Advertisements

About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email champion@retailchampion.co.uk.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s