THE BITTERSWEET TASTE OF BUSINESS RATES CHANGES

RESILIANCE. Most business owners will tell you how important that quality is. It’s certainly something I have had to pull on building up PinPointer UK from my dining room table twelve years ago to a company with a turnover of nearly £2m.

We have grown into the country’s leading places agency working with 32 exclusively managed locations. We bring together brands, place managers and creative agencies to deliver new opportunities to the high street and beyond.

Of course there have been, and will continue to be, many challenges ahead – it’s all part of the rollercoaster ride of running your own company.

Rate relief

There’s about to be another test for us because outdoor markets and the use of space for commercial activities will be subject to business rates for the first time under proposed changes announced by the government.

The government is working towards allowing local authorities to keep 100% of business rates – at the moment English authorities can keep hold of 50%.

These were part of the changes announced by the former Chancellor George Osborne in, what turned out to be, his last Budget in March.

Other changes will see the threshold for small business rate relief permanently raised from £6,000 to a maximum of £15,000 and increasing higher rate relief from £18,000 to £51,000.

Bittersweet

This has to be welcomed because the proposals should see 600,000 small firms not paying any business rates while it’s estimated there will be smaller bills for another 250,000 small businesses.

Whenever I attend a high street related event, the two things that come up every time are business rates and car parking and there is no doubt that the rates are crippling some small companies.

But for us the changes are bittersweet. I estimate it will cost clients on average an extra £150 + VAT each time they secure a location on top of what they are already spending with us.

The market has changed massively regarding face-face outdoor promotions and in terms of acquisition costs of acquiring a client these have become tighter and tighter recently.

Clients have an average spend, I think this will probably add 20-25% on top of that, which means they will need 25% more clients. High Streets are struggling and are in decline therefore this is going to impact on revenues.

Negative side

I have been working with the Association of Town Centre Managers on the potential impact of the rate changes.

Ojay McDonald, the ATCM’s public policy manager believes a move towards 100% rates retention is a ‘double-edged sword”

He said: “The intention of the policy is to encourage local government independence from Whitehall and to incentivise them to grow economy activity. This is would be welcomed if the Department of Communities and Local Government can get the details right.

“However, there is a negative side. There has still been no attempt to address the fundamental shift in the economy that comes with digital technology. A significant amount of trade is taking place online now instead of in stores. This is hindering high street retail with the symptom being vacant units across the country.

“Instead of modernising the system accordingly to sustain falling tax revenue the government has decided to broaden the tax base to include the commercialisation of space. Activities such as outdoor markets and events could be affected by this. This will only hamper efforts to animate high streets without dealing with the structural problems of the tax.”

We will continue to put our case, whilst recognising the real hardships small businesses have been facing. It is in all our interests to pull together for the long term health of our high streets.