Are we seeing the green shoots of economic recovery, again? Maybe. Whether the answer is a yes or a no, business rates continue to be a hot topic. Their impact is felt particularly strongly by small businesses who are struggling to find their way through the recession. With its mix of chain stores and smaller, independent shops Twickenham provides some good examples of the challenges being faced by smaller business owners on the high street in the current climate. In this guest blog, Twickenham resident Mike from Milestone Commercial explains the problem and gives his view on what the government, and us locals, can do to help our independents.
Consider if you will the nicest house on Montpelier Road or similar, 7 bedrooms, close to the river and an asking price of £5 million. The total tax take on this property is £3,180.78 per annum in council levies. (Incidentally it’s the same figure for less salubrious houses in North Twickenham yards from the A316 and the stadium, there is no upper limit or mansion tax, if you will.) Compare this to 33 King Street, the old Day Lewis Pharmacy, which incurs business rates payable of £12,000 per annum. Alternatively, consider the local upholsterer on a trading estate in TW2 paying £8,000 per year, the likely cost of employing an apprentice.
Late last year I, along with Twickenham and other town-centre representatives, met with Vince Cable at Kamares Restaurant on Heath Road (a perfect location by the way, the proprietors knowing only too well the true costs involved in running a small business in Twickenham) to raise the plight of small independents having to compete on the same playing field as Boots and Harris & Hoole. And the simple answer, which Vince seemed to grab very early, is that it isn’t fair. Small business rate relief capped at £12,000 rateable value is irrelevant to anyone with a reasonably sized shop or indeed more than one outlet. Happicraft, for example, is taxed at the same rate pro-rata as Waitrose next door.
But it appears the senior partners in government and their ‘advisers’ have already killed off Vince Cable’s good intentions and any hope of relief on the horizon. The decision to delay for two years the much-hoped-for revaluation of business rates based on current market conditions (i.e. downwards) in the interests of ‘stability’ has left a sour taste in the independent-led trading hubs of the borough. All businesses are now rated on market conditions dating as far back as 2008, the absolute peak of the market at the dawn of the banking crisis.
And this impacts on vacant premises in our town centre. As an agent, I can negotiate rent, lease length and various concessions with most landlords and outgoing tenants but intractable business rates kill just as many deals. There are shops we have let which pay rates as 100% of rent. That simply isn’t right. It’s not just independents, one in seven shops is said to be in arrears and Bill Grimsey, the thinking man’s Mary Portas, former head of Wickes, suggests the recent high-profile chain collapses are rates, not rent, driven.
Business rates need a long, cold overhaul, SBRR (smalll business rates relief) needs to be doubled or premises valued on turnover/profits, not perceived rent.
As we batter our heads against the brick wall of the tail-end of recession/continuing austerity whilst online and offshore retailers flourish in their tax-havens, I implore all fellow Twickenham residents – as our parents did – to please shop local. It is actually a very pleasant experience and we will all benefit from a diverse and robust local economy. As for Dr Cable’s advisers, two weeks work experience on a whelk stall should be an obvious CV pre-requisite.
About the Author:
Mike is from Milestone Commercial and is a Twickenham resident.
W: Milestone Commercial
T: 020 8977 5817