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Councils should use their power to cut Business Rates for small shops

There is a community benefit in a local pub or corner shop which can sometimes be measured in economic terms but in a rather imprecise way. For example the Duke of Westminster's Grosvenor Estate includes a large chunk of Belgravia. I understand that they charge below market rents to butchers, bakers and grocers in streets like Elizabeth Street - this means Grosvenor Estate get more when selling leases for their flats in Eaton Square.

Councils now have the power to cut (but not put up) Business Rates from the level set nationally. They could reduce them for small shops, or for a particular high street, or for a particular type of business. The discretion under the Localism Act 2011 is wide - the Council merely has to be "reasonable" in showing regard for the interest of Council Taxpayers.

It might appear that any reduction in Business Rates would reduce the Council's revenues. However this could be offset by fewer empty shops. When a shop is empty only 50% of Business Rates are payable for three months. Even that money can be hard for a council to collect if the retailer has gone bust and they then have to go after the owner of the site. The British Retail Consortium estimate that 11% of shops are empty.

The Government have done their bit. They have increased the Small Business Rate Relief. They have also made it less bureaucratic by making it applied automatically rather than firms having to fill in a form.

Local government should play it's part as well. Pubs often find the way to survive is to go upmarket. To smarten themselves up. If they do so they are clobbered with higher Business Rates.

Change of use planning rules should be made more flexible. For instance if the owners of a shop (A1) wish to apply to change it into a bookies (A2) the council must treat it in the same way as if it applied to be an employment agency (A2.) Councillors might want to allow an employment agency but not a bookies. Or they might want to allow a bookies but charge them more Business Rates than a shop.

These should be local decisions.

If a corner shop or local pub is driven out of business as they can't afford the rates then the community takes a knock. Councillors can no longer say that Business Rates are beyond their control. They should takes responsibility.


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