‘Massive’ rates hike to hit small businesses
Fears changes to ‘rateable values’ will decimate high streets with average 45% increase in bills
10 February, 2017 — By Koos Couvée
Stacey Thomas, who bought The Lexington pub and live music venue in 2008
FEARS have been raised that “massive” rises in business rates could decimate Islington’s high streets, as independent businesses are forced to close or move out of the borough.
The government has revalued the “rateable values” of businesses – which are updated every five years – and increased them for businesses in Islington by an average of 45 per cent – the third-highest rise in England.
The Lexington, in Pentonville Road, a pub and live music venue, will face an increase in rates of £15,000 from April after a whopping 200 per cent increase in rateable value.
By contrast, Premier League Arsenal, the sixth-richest football club in the world, will actually see its rates reduced – despite being in Highbury, where rates for retail shops are set to rise by an average 52 per cent.
Traders have warned that the rises will have a crippling effect on small and independent businesses in places such as Camden Passage, Upper Street and Highbury Barn.
The Islington Chamber of Commerce and Angel.London business improvement district have launched a petition calling on the government to freeze the implementation of the business rates valuation until after Brexit.
Islington Council is supporting the campaign. Christine Lovett, chief executive of Angel.London, said: “High streets that are alive and busy are a lifeline for local people and draw the community together. The increase in business rates could drive out the very businesses who not only keep our town centres vibrant but employ Islington residents.”
She added: “It’s all in all an unfair way to collect taxes from business who are struggling in an uncertain economy.”
The Town Hall keeps 30 per cent of rates collected in the borough – half goes to the Treasury and a fifth goes to City Hall. Islington is working with Hackney Council to campaign against the rises as the neighbouring boroughs face the highest rates rises in the country.
The council’s finance chief, Councillor Andy Hull, said: “Their [the Valuation Office Agency’s] methodology seems to be throwing up some very perverse outcomes. To see Arsenal’s rates go down is surprising, when you see much smaller outfits in the borough facing huge hikes.
“It’s right for the council to speak up for local business who are facing a huge rise and are going to struggle to cope.
“The government says it’s on the side of business and enterprise and they need to put their money where their mouth is. “We have some experience of landing blows on this regressive government and hopefully this will be another success.”
The petition also urges the Treasury to extend “transitional reliefs” for affected businesses. Doing so would mean bills would increase at a lower rate, over a longer period of time – helping small and medium-sized firms deal with the impact of a substantial rise.
And it asks the government to assist small companies by increasing the threshold for Small Business Rate Relief in inner London, with the government funding the higher relief.
Currently, companies can apply for the relief scheme in full if the rateable value of their property is less than £12,000, and at a tapered rate if it is between £12,000 and £15,000. The petition calls for the lower threshold of £12,000 to be increased.
Islington Council’s executive member for economic development, Cllr Asima Shaikh, added: “We urge the government not to go ahead with these plans and are offering local companies advice on how they can manage the changes ahead.”
The petition is available here.
The Town Hall is supporting calls by London Councils for a separate business rates system for London.
A government spokesman said regular business rates revaluations make sure each business pays its “fair contribution” by ensuring that the share of the national rates bill paid by any one business reflects changes over time in the value of its property relative to others.
The spokesman added: “This government is delivering the biggest ever cut in business rates, meaning from April a third of all businesses will pay no rates at all, and nearly a million businesses will see their bills cut.
“Three quarters of businesses will see either no change or a fall in their bills from this latest revaluation, however if a ratepayer believes the details we hold are incorrect then they can contact us with suggested amends. From 1 April they will have the option of formally challenging the valuation.”
Pub/music venue: ‘We’re punished for being successful’
STACEY Thomas bought The Lexington, a pub and live music venue, in 2008 and turned it into a successful business.
She said: “Without a doubt this [rates rise] could send a lot of businesses under. It’s not going to be sustainable and I don’t think the government has thought it through.
“Islington and Hackney, which are the most gentrified in the last 10 years, are hit the hardest. And with austerity and with Brexit coming, and we’ve seen price increases because the value in the pound drops, and it becomes unsustainable.
“There already have been a lot of closures of music venues and this way you’re going to see more. They run on tight budgets.
“We’ve just had a 40 per cent rent increase and it eats into your margins. This means you can’t afford to take a risk with bands, which lessens our cultural value. That then takes a lot of support away from the music community.
“It just feels like when you’re successful you get punished for it. As an entrepreneur, when you do something, you take risks and employ people – I had to risk my entire savings and life, borrow money, open up in the recession and then, when you turn a corner and when you do well, the landlord and government want it all. You just think, what’s the point in that?”
Camden Passage shop: ‘This could have huge knock-on effects’
Susan Cropper at Loop knitting supplies store
SUSAN Cropper, who launched her knitting supplies shop, Loop, in Camden Passage, Angel, six years ago, said the imposition of high business rates rises in Islington is “short-sighted”.
“Independent shops are the lifeblood of communities,” she said.
“People come to the Angel because there are so many interesting, quirky shops, but it will especially hit us hard. If business rates rise by £1,000 I have to take another £2,000 in trade to make up for it.
“I employ nine people and they spend their money in the neighbourhood. I buy from certain suppliers – there’s a whole chain of people behind me. If people come to Camden Passage we refer them to cafés and bookshops. My point is, if people go out of business there will be huge knock-on effects.
“There are already people closing down because of the high rents.”
Restaurant: ‘Government must take note of situation…’
Stefano Anfussi outside Pasta Remoli in Finsbury Park