The updated British Retail Consortium report into the High Street of the 21st century makes it clear that a ‘supportive regulatory and fiscal regime’ is needed to make the cost of operating and investing in town centres more manageable. It’s clear, from both practitioner and academic commentary, that business rates are perceived to lie at the heart of the problem. The BRC report comments:
“Shifting Business Rate Multipliers from the RPI measure of inflation to CPI would bring a welcome relief to struggling businesses but has not yet been accepted by the Government. The case for such a change is clearly urgent, in view of the elevated RPI levels in recent years and widespread business support.” (BRC, 2012, p. 29)
The Fair Rates for Retail campaign has highlighted this issue, alongside the delay in revaluation which, it is suggested, pits North against South. But as James Lowman, CEO of the Association of Convenience Stores writes,
“There’s a lot of nonsense talked about rates… In short, if your rental value has gone down less than 13%, you should sit tight because you are paying less than you might after a revaluation. If your rental value has gone down by more than the average, you will be paying above the odds for two years longer than you should.” (James Lowman, Convenience Store, 20 Nov 2012).
At the same time, the positive activities generated by the Portas Review continue to proliferate. Lowman again remarked in a recent blog post that, despite the fact that the Government had not introduced the one key recommendation which, from his point of view, would have safeguarded town centre investments – the requirement for the Secretary of State to sign off new out of town developments which, Lowman noted, continue apace – Portas had generated a phenomenal amount of attention, goodwill and activity across the country.
We were struck by this comment. To what extent does this activity represent good value for money – at least for Government? Here are some quick calculations.
Business rates income in England were some £21bn in 2011-12, of which the retail share is estimated at 28%. The cost of Portas-related announcements to Government, alongside mandatory and discretionary shops relief, we estimate totals some £25mn. This is less than 0.5% of rateable revenue produced from retailing. Of course, business rate income pays for an awful lot of things. But given that this nudge led to an enormous amount of energy generated on the ground amongst town centre stakeholders, teams and volunteers, this is pretty good value for money. And if the estimated increase in retailers’ rates bill for 2012 is the £350mn estimated by the BRC, then that same £25mn, comprising just 7% of the increase, is a drop in the ocean.
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