Business Rates – A Very Twickenham Problem?

Some shops. In Twickenham

Some shops. In Twickenham

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.

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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

12 Comments

Filed under Local Issues & News, Random Stuff

12 responses to “Business Rates – A Very Twickenham Problem?

  1. anonymouse

    Chain stores such as Starbucks, Burger King, KFC and Subway?!

    • anonymouse

      BTW, that’s a reply to Simon H’s statement that…
      ‘All chain stores started as independents…’

    • Simon H

      Yes, even them, anonymouse. It may have been many years ago, but they didn’t just appear out of the ether as major chains. The first Starbucks was opened by three Univ of San Francisco students in 1971, for instance. The ultimate indy start-up. Colonel Sanders started out of a tiny pit stop in the Apalacians.

  2. Glen Rbberts

    Mark> I think they pay about 20% of the standard business rate

  3. I very much agree with the above article. Unfortunately, local shop owners are not as powerful a lobby as wealthy property owners. Two genuine queries that I hope Mike may be able to answer:

    1. What is the position with charity shops? Do they pay any business rates at all?

    2. Does the council (as opposed to the government) have any power to offer relief from these high rates?

    • mike milestone

      the council has no discretion, the council only collect on behalf of central government and keep a portion , the monies are then distributed to the more needy parts of the country. From Memory LBRUT raises about £75 million in taxes and keeps less than £25 million. Less than 1% of business rates bills remain unpaid and this apparently down to robust collection methods.
      Most of the larger charities i believe obtain 100% relief

  4. Simon H

    Good post, Mike. The only thing I’d slightly disagree with is the idea that it’s somehow unfair that independent shops have to pay the same rates as chain stores. All chain stores started as independents…

  5. you are correct on charity shops, 90% is common and the larger chains get 100% relief. If you don’t pay for stock or staff either it is a tidy business model

  6. Glen Roberts

    Pretty sure charity shops get HUGE subsidies aswell. Which is why Twick has so many of them. Competing against chains is bad enough, but competing against an entity which barely has to pay anything it all is outrageous

    • Purple Haze

      As I understand it at present, organizations occupying a building solely for charitable purposes are entitled to 80% mandatory rate relief, funded by central government.
      Local authorities can then choose to grant the remaining 20 per cent rate relief at their discretion.
      Some councils waver payment of rates altogether. For example, this has been the case with some charity shops in Portsmouth.
      A new scheme currently being looked at will require councils to fund 75 per cent of all discretionary relief payments. Not good news for councils in these cash-strapped times.
      Also charity shops sell goods that are donated free and are mainly staffed by unpaid volunteers.
      Whilst not criticizing the good work these shops and organizations do, it is hardly fair on other small businesses that they receive such generous terms and conditions.
      The other issue is that some of these charities also manage to pay large salaries to their executives and managers, and this has been the subject of debate this week. You can argue that to attract the best to work for an international charity, you need to pay the best you can, but that’s another issue.
      See: http://www.bbc.co.uk/news/uk-23584191

      However, in the distant past, the operations of some independent ‘one-off’ charity shops has been questionable too, as valuable donated goods have been siphoned off and sold without the money going to the charity.
      Things are much better organized these days with proper regulation and accountability, and charities use knowledgeable people to identify potentially valuable items. This might not be very good for the voracious bargain hunter and the second-hand and antiquarian book trade may have issues with certain charities, but why shouldn’t charity shops maximize the value they can get for their goods?
      But if we are to sustain and regenerate our high streets, implementing a fairer and affordable tax regime for all retail businesses needs to be looked at much more carefully.

    • Rufus McDufus

      Perhaps there should be some sort of limit on the amount of charity shops? The problem is it’s strangling the high street and the cost of concessions is making it more expensive for normal shops.

  7. nemesis

    Mike is absolutely right. These high rates are often a deciding factor in whether a business is viable or not and deter business from opening new stores or hiring new staff. They don’t get any representation or services for this extra tax burden, although there may be more accountability if the rates were returned to local authority control as they once were.