Rates hike threatens to pull plug on music
Business rates rises risk putting what’s left of ‘a nation of shopkeepers’ out of business, warns Marcus Harris. They could also mean kissing goodbye to your favourite music venues and nightclubs
24 February, 2017 — By Marcus Harris
The Lexington, facing a business rates rise of £16,000
The government is deep in the process of reassessing business rates and it’s looking like a complete disaster for small businesses. Every five years, local business rates are reassessed by the government, based on a shadowy concept known as “rateable value”, which has resulted in small and medium businesses across London facing increases up to 800 per cent and a long trip to the bankruptcy court.
The proposed increases have incurred the wrath of the entire political spectrum, from readers of the Socialist Worker to the Daily Mail, because, for once, there is a unanimous understanding that this isn’t good for business and that decimating a high street of independent businesses hurts the local economy, culture and community.
And guess what? Putting what’s left of a “nation of shopkeepers” out of business is the sort of thing that really winds up Daily Mail readers, and there is nothing more frightening to a Tory than angry Daily Mail readers.
As a result of these rises, you can probably kiss goodbye to your favourite live music venue or nightclub. Vice reports that The Macbeth, in Hoxton, is facing a rates increase of 800 per cent. We at The Lexington are staring down the barrel of a 200 per cent increase; 100 Club in the West End a 50 per cent increase.
There’s an average rise of 45 per cent for grassroots venues across the board. These are businesses with particularly high operating costs. Many clubs and venues are forced to spend a huge amount of money on door staff and council-approved private area security who operate as a late-night paramilitary bouncing force in vans. In many cases they’re forced to shell out for buffer housing to avoid noise complaints from their immediate neighbours.
So how are the rates actually calculated? The only clear criteria are that the rates are based on the value of the property where the commercial premises are located, which almost sounds fair enough. You’re thinking of a newly-gentrified suburb awash with estate agents, restaurants and monied thirtysomethings, but that’s not the reality of how property values increase. They increase for everyone.
Marcus Harris, promoter at The Lexington pub and live music venue in Pentonville Road.
Besides, using property prices as any form of economic indicator is absurd following the many years of exponential growth to the sector in the face of falling wages and stagnant GDP.
Second and probably more importantly, most small businesses are not fortunate enough to own the freehold of their site so they’re being penalised for being successful (where rates increase is turnover based) as well as being penalised for the growth of an asset which doesn’t belong to them.
This is a really important point because the business is already paying a huge amount of rent to use the site (lease), often with very little long-term rent stability. In the particular instance of The Lexington, we’ve just been lumped with a 150 per cent rent increase. To sum up, the only winner is the landlord, who wins twice.
Beyond property prices, the calculation itself changes, based on what sort of business you are. Councils are privately suggesting that business owners challenge their rates increases and the assumptions the Valuation Office Agency is making about their businesses.
Interestingly, cultural assets like galleries and theatres are treated to rate freezes, subsidies and even reductions, a status and benefit which live venues and clubs are not afforded. This is because music isn’t culture, according to the official ideology of the state.
The good news is that the press and a number of councils are railing against the government on this, so it’s really important to show popular support for your local businesses.
There is a petition gathering momentum – supported by Islington Council – seeking government intervention and reassessment of the way rates changes are calculated.
At this time it’s important to remain vocal, whether your position is one of support for hard-working small business owners, preservation of your community or your desire to save what is left of the country’s live music culture – something which has been exported the world over as a massive part of British identity and is a way of life for many.
A version of this article first appeared as a blog post on The Lexington’s website (thelexington.co.uk).