Business rates: Town Hall launches consultation on £7m relief fund

L-R: Meg Hillier MP, Len Maloney (JC Motors) and Mayor Philip Glanville deliver the petition in March. Photograph: Hackney Council.

Hackney Council has launched a consultation on how to distribute £7.1 million to mitigate the impact of soaring business rates on local traders.

The money will be targeted at the small and medium sized businesses that have been worst affected by the huge hike in rates that came into effect in April following dramatic changes to government policy.

But certain types of businesses, including betting shops, payday lenders and national and multinational chains, as well as vacant properties, will not be eligible for relief money.

The government published the new ‘rateable values’ of business properties in March, and Hackney was hit with the second-highest increase in the country, with rates going up by an average of 46 per cent. The average rate increase in England was just nine per cent.

The borough has been disproportionately affected because property prices have risen dramatically since the last time rates were calculated in 2010, which were based on 2008 property prices.

Rates tend to be the third biggest expense for a small business, only after rent and staffing costs.

When the rate hikes were announced the council protested and called on the government to offer more support for small businesses. It ran a joint campaign with the East End Trades Guild, which saw a petition with 10,500 signatures being delivered to Downing Street in March.

Philip Hammond, the Chancellor, later announced the creation of the Discretionary Relief Scheme in the spring Budget to help the worst affected businesses.

Councils up and down the country have been allocated part of a £300 million fund and is designed to provide relief until 2021, but must come up with their own scheme to distribute it locally.

Hackney Council has received £7.1 million, with £4.1 million available in the 2017/18 financial year. It now has launched its consultation on how it can best be distributed, having waited for more information from central government about the fund before proposing its local scheme.

The amount of relief given to a business will be proportionate to the amount its rates bill has increased between 2016/17 and 2017/18, under the council’s proposed scheme.

Businesses in the borough will only receive relief money if its rateable value is £200,000 or less, and if its new business rates bill was hiked by 12.5 per cent or more as a result of the government’s revaluation. It is estimated the around 2,200 small and medium sized businesses may qualify for some relief.

Krissie Nicolson, the director and founding organiser of the East End Trades Guild, welcomed the announcement and told the Citizen that representatives from the Guild will meet the mayor before the end of the consultation.

But she cautioned that the council’s plan as it stands may spread the pot of money too thinly across the borough’s businesses, and that a more targeted approach may be more suitable.

She said: “It seems what [the council] is trying to do is distribute to as many people as possible, and I’m not 100 per cent sure if that’s the right way to go, but we’ll have to see how many people respond to the consultation.”

Nicolson added that small manufacturing businesses renting large premises to house equipment might need more help than others, as they are “doubly impacted” by high rents and business rate hikes.

“There’s a small amount of small businesses that have gone up considerably more than others because of the floor space they have to occupy,” she said.

“Those sorts of businesses are actually really valuable because they are part of the real economy. It’s not speculative, they provide entry-level jobs to local people and they’re one of the bigger types of employers as well.”

Cllr Guy Nicholson, the cabinet member responsible for business, said: “The Council’s priority is to support the small and medium businesses which are at the heart of Hackney’s diverse communities and make up the borough’s unique character. Whether it be the established family firms or innovative start-ups, the funding is proposed to be focused on the enterprises which create Hackney’s thriving and vibrant high streets and business clusters.

“Though this extra funding, and the other support measures announced by the Chancellor, is welcome, it is not enough and we know that many businesses will still face difficult months and years ahead trying to cope with the government’s hikes. Hackney Council will keep doing all it can to offer support and advice to our business community, and make sure the call for a reasonable, fair and affordable rate system is heard in Westminster and City Hall.”

Krissie Nicolson also said that in the run-up to local elections in May 2018, the Guild will “make sure that we can inform people who will be standing for election what the most important issues are to small, locally owned businesses”.

Full details on Hackney Council’s proposed Discretionary Relief Scheme are available at www.hackney.gov.uk/businessrates. The closing date is 26 September.