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Triple business rates increase 'is putting small traders at risk'
Nicholas Cecil and Mirand Bryant28.10.09
Small firms face being driven to the wall by a "triple whammy" of business rate increases, MPs were warned today.
Mark Field, Conservative member for Cities of London and Westminster, accused Chancellor Alistair Darling of seeking to "plunder" businesses and treating them like "cash cows".
In a Commons debate, Mr Field highlighted the impact of three tax moves:
* The five per cent increase in business rates this year.
* The business rate revaluation, which will come into effect in April next year.
* The levy being imposed to raise £3.5 billion for Crossrail.
Mr Field told MPs today: "Many firms will have to absorb a triple whammy of taxation. Companies in my constituency are being plundered to such a degree that I fear their success is being taken for granted. With trading conditions so tough, such a level of taxation could scupper the city's fragile economy."
He said that with a revaluation of last year's property rental values, the average business rates bill in Westminster is expected to soar by 38 per cent next year. The move would rake in an extra £456 million for the Treasury.
While the revaluation aimed to be fiscally neutral, many firms in the capital would lose out because of the high rental values before the recession. Mr Field said a very big Oxford Street store would face an estimated £3 million rise in business rates for 2010/11. For a small firm in Soho the figure would be £1,500.
Meanwhile, companies with a rateable value of more than £50,000 have to pay the Crossrail levy.
Mr Field said increased valuations would also push about 3,500 more Westminster companies above that threshold. One Soho trader, Richard Piercy, 47, who owns Zest Pharmacy in Broadwick Street, said: "My shop has been here since 1950 so is a real part of the community. I love working in Soho but I'm very worried by these huge business rate increases.
"It's unfair that we shoulder the burden for the rest of the country.
"It's a ruinous formula. Along with any rent review that will bring us into line with ludicrous rates paid in the boom years, many businesses will face a very uncertain future."
Ministers say London is getting transitional relief to lessen the impact of the rates shake-up. The capital will get £935million out of £2billion of transitional funding available, the Department for Communities said.
In outer London, just over half of firms would pay lower rates as a result of the reforms, by an average of £950.
A spokesman added that companies are also being allowed to delay paying 60 per cent of this year's business rate increase. Firms will be able to spread the payment over the next two years.
We're being used as short-term cash cow'
Tim Bryars, 35 Antique map and book seller, Cecil Court, off Charing Cross Road
Mr Bryars said his business rates bill of £4,325 had risen to £7,696 for this year, and would rise a further 30 per cent in April.
“Instead of supporting small businesses, government is using them as a short-term cash cow. And it is very short-term, because soon those businesses will be gone.” He said two map shops had already shut and “I'm worried we won't be able to survive”
Holly Andrew, 36, Pall Mall Printers and Stationers, Royal Opera Parade, Covent Garden
Miss Andrew said her business rates were £6,500 per year — almost half her rent — and could rise by up to 38 per cent. “It worries me because my rent is already very high and the rates make it higher. I do old-fashioned printing, which has demand here. A shop like this needs to be here. If all the little shops were sent out of London it would make it a very empty town.”
Reader views (13)
A third???? i wish, my rates are going to rise nearly 300% if i dont win an appeal in the next 5 months, I cant see any profit in the business if it goes through
- Joe, Westminster
It's especially important to support independent shop owners. London is unique because if it's diversity, but these business rates could make it a city only for franchises.
- Etan, London, UK
I used to work for another small business, The Cecil Court Stamp Shop, until it closed (after 80 odd years) because of crippling business rates last Christmas. I am sad to see that many other people in similar trades are struggling so badly and facing ruin because of these unrealistic rates. I hope something can be done to help them before we lose of of these beautiful little shops.
- Joe, London
I agree with all the above comments, and the issue raised by the article angers me, as someone who always, often at financial and practical cost, goes to local and independent retailers and businesses. My heart goes out to Ms Andrews and Mr Bryars, who runs a superb shop , the closure of which would be nothing to do with its popularity and charm. At this time when people are watching their wallets, it is sheer madness for the London government to allow such sudden and enormous rises in rates. It is behaviour comparable to pouring water on a flood. Anyone who reads this should write in support of small businesses to their MP
- Adam Toy, London N4
This is shockingly short-sighted of the government - unless they want to replace the wonderful diverse specialist bookshops and coffee houses of central London with Borders and Starbucks as far as the eye can see. Perhaps I missed something and tourism is no longer an important source of trade for our capital city. Surely that generates more for the economy than this short-term rates hike will do?
- Frederick Kemmal, London, UK
Cecil Court is an oasis of stylish independence in a desert of chain stores and pizza-related shell-suited squalor. Visitors come to London to see it. They don't come to London to see an international chain of shoe shops, or whatever. All credit to the Cecil Court Association for protesting, and to Mark Field MP for arguing their case. And perhaps our shaming apology for a Government should remember that most big businesses (whom they seem to adore) started out as small ones!
- Alex, London, UK
LAPADA The Association of Art & Antiques Dealers represents some 600 small businesses many of whom are having to close their shops in London and all around the UK because the level of business rates make it impossible to keep going. As a result, formerly attractive streets with a variety of businesses that used to attract tourists and other shoppers in London and around the country are becoming cloned and boring. Only the government can help, but they seem to think that they can get blood out of a stone when in fact revenue will decrease as small shops go out of business.
Please continue your earlier 'Save our Small Shops' campaing.
- Fiona Ford, London, UK
I agree strongly with Tim Bryars and Holly Andrew. I've had a shop in Central London for 20 years. I have never known trading conditions so tough, then the Governement introduce the withdrawal of Business Rate Relief during the worst Recession since the 1930's. In addition they have revalued my property above actual the rent, so further increases are approaching. I have a successful business and pay the market rent, I am told it adds to the character of Central London. We are not asking for special favours but do object to being milch cows for Government financial mismanagement. There are many empty shops in the area and others change hands frequently giving an air of neglect and incontinuity. The businesses of London should unite and resist any more punitive Government taxes.
I am surprised that the organisations which claim to represent small business have been so quiet in recent months.
- Kenneth, Westminster, UK
Places like Cecil Court and Royal Opera Arcade are vital if we want to keep London’s streets interesting and diverse and full of character. Rate rises such as these are another step towards the bland, chain-filled, non-places of so many other towns, here and increasingly around the globe. Sometimes it feels like we could be living anywhere and if small, independent businesses aren’t given a fair chance this is going to be increasingly the case. We need to stop this now, as it will be even harder to turn back the clock.
There are plenty of examples of sophisticated rating systems in other countries used to promote different types of businesses; and in Paris, for example, there are certain parts where chains are banded completely. Small businesses need government support and our support as well, or we risk losing the visitors we depend on, not to mention the uniqueness of shops and personalities to be encountered by a stroll down places such as Cecil Court.
- Jill, London, UK
Guess what, all of these increases will be passed straight on to the consumer (there is no other means of funding them) so it will fuel inflation. Whitehall certainly seems to be on another planet...
- Dannyp, Egham
Business rates need revising to encourage development. A
we need to reduce business rates for manufacturers who produce goods for sale as they are the backbone of the economy as they employ so many people. Shops are different, why should an ordinary small shop pay more in rates than it costs to employ a member of staff, profitability should be a factor, too many shops remain empty due to high set up costs. If a shop remains empty for 1 year, a new occupier should get the first year free of rates, Fine tune the rating system and the economy would go faster.
- Been There Myself., The Lake District
Just like all poltitions they will grab all the money they can for their short term goals and bonuses. As a small busines owner in Westminster I am going to have to make redundencies to cover these additional taxes.
I can only assume that Westminster council wants businesses to move out of the area and leave derelic premisis and unemployed resedents behind. That is certainly my plan - they take far too much out of my business as it is.
- Ben, london
How odd that Mr Mark Field seem to forget the primary concerns of constituents when he was giving his speeches in support of Crossrail. Many warned Mr Field about the financial black hole, the land acquisition in favour of developers and the harm to residents. It now appears Mr Field cares so much about these issues that he is raising them after voting for a scheme that was half baked. Perhaps he is expecting constituents to forget what he did and instead be left concentrate on what he says. I think the Boris and Mark Field's rhetoric careers are numbered not least by the financial black hole of the £16bn+ Crossrail where it is is clear the London tube can rot in favour of a Crossrail scheme for the City! I say out out out as a Londoner
- Val Keller, London UK
