The business rates issue hasn't disappeared, but small businesses have
Business rates over the last couple of years have been an utter shambles
The way the government has handled business rates over the last couple of years has been an utter shambles.
Having set rates that varied wildly and in many cases unfairly (it’s widely agreed, for example, that the way rates are calculated benefits businesses in retail parks over high streets), the government tried to appease the small business community by introducing a rate relief package.
But lo and behold, news is emerging that huge chunks of the relief has yet to actually reach small businesses across the country. Meanwhile, many industries are already facing crises as a direct result of business rates, and the government has gone completely silent on the matter.
This issue is no longer front-of-mind for the government or the media – but it certainly is for thousands of struggling businesses across the UK.
BT’s rates increase makes headlines – which is a needless distraction
BT’s revenues have plummeted recently, and the giant has named business rates increases as one of the causes. It didn’t name consistently diabolical customer service as a cause, but that’s another issue.
Unfortunately, this news has slightly skewed the overall issue, making it seem like a broad business problem that requires some thought, when really it’s much more serious. Big businesses can take the hit; small businesses cannot. Indeed, SMEs desperately need the relief that isn’t getting to them, and now.
It’s been nearly a year since rates relief was introduced, and yet thousands of businesses still haven’t received a penny. In London, £30 million has yet to be allocated, and in Hammersmith and Fulham, not a single business has received anything. SMEs are doing what they can to survive – or indeed, not surviving at all.
Since the rate hike last April, two pubs a day have closed across the UK. And while chain-brewery owned pubs like Wetherspoon’s can swallow the increases, independent pubs have paid the price.
Car dealerships have also been closing their doors in record numbers – and the situation is going to get significantly worse. Motor dealerships in England and Wales face a £158.5 million increase over the next five years. Once again, the archaic way in which rates are calculated has been especially damaging for car showrooms – they suffer for having particularly large premises.
Meanwhile, the London Chamber of Commerce and Industry has warned that hundreds of London firms are either leaving the capital or considering an exit, in part because of business rates.
What can affected businesses do?
First and foremost, businesses need to educate themselves on exactly what they are entitled to.
The government’s guide to transitional rate relief includes a helpful guide to how much discount a business is entitled to. But importantly, it notes that councils should adjust your bills automatically if you are eligible for relief.
Evidently, this isn’t happening across the board. So SMEs must work out what they’re owed, and get in touch with their council directly.
The bottom line is this: if you simply wait for support to come, you could be waiting for a long, long time. Chase your local authority, and encourage others to do the same.
- Christian Nellemann is the Founder and CEO of XLN, a provider of low-cost phone, broadband, energy and card processing services exclusively to small businesses. A serial entrepreneur, he’s a two-time winner of Ernst & Young’s Entrepreneur of the Year award and one of only 17 inductees into their Global Hall of Fame. He is passionate about small businesses, and is a featured columnist for realbusiness.co.uk. Follow him on Twitter @christianxln