H&F Council named and shamed for delaying Business Rates relief

In the Budget in March this year, the Chancellor of the Exchequer announced a £300 million relief fund for Business Rates. The reason was that while the rates revaluation was revenue neutral, some firms were being hit by sharp increases. This scheme is to ease some of that burden. Most welcome. Straight away the figures were published as to how much funding was available to each local authority to pass on. All the local authorities had to do was to decide on the details for their discretionary scheme, adopt it and ask central government for the money. But many have been slow to get on with it.

Marcus Jones, the Minister for Local Government, told Parliament in September:

“The Government has been consistently clear that it expects local authorities to make rapid progress in helping business by implementing these relief schemes. Overall, however, despite various examples of good practice, the pace of providing relief to ratepayers has not been acceptable. I have written today to those authorities that have not fully implemented all three schemes asking them to rebill businesses that are set to benefit from relief as soon as possible.”

The Department for Communiities and Local Government publishes a list of “billing authorities that have confirmed to the Department for Communities & Local Government that they have begun rebilling for the three business rates relief schemes announced at spring Budget 2017.” There were 46 eligible councils that had not yet confirmed they had started rebilling for the discretionary scheme.

The list included Hammersmith and Fulham.

The Federation of Small Businesses is understandably exasperated:

It’s now nine months on from the announcement of emergency relief for those most harmed by April’s business rates revaluation. While some councils got on and distributed that help, others have been slower to take action.

“We are now down to the rump of 46 councils who have yet to lift a finger to help their local businesses. Among them are authorities with some of the largest fund allocations, including Hammersmith & Fulham, Nottingham and Northumberland, who have collectively been guaranteed £7.5 million in urgent support for the five years ahead.

“It’s completely unacceptable that small firms in these areas are being put in jeopardy by this lethargic attitude.

“FSB research shows that one in five small business owners were considering closing or selling their firm as a result of bill hikes. The support promised by the hardship fund could make the difference between business life and death for many in these 46 areas this Christmas.

“Before council offices have their parties and close for the festive break, we call on these 46 local councils to do the right thing and help businesses that are struggling this Christmas. Let’s get the 46 down to zero.”

The Council’s Cabinet did finally agree to adopt a scheme for this on November 6th. I suppose it will write to let the Government know in its own sweet time. I asked why it took us so long, given that the neighbouring borough or Kensington and Chelsea had sorted it out months ago. I was told it was because differences in the “decision making process” meant that K&C did not need Cabinet approval. Nonsense, of course. K&C also gave Cabinet approval – the difference was they approved it on April 27th. Hammersmith and Fulham Council, having been asleep at the wheel for eight months, then had the nerve to boast it had “secured” £4 million “to help local businesses”.

Councils will routinely issue virtue signalling proclamations about how they are “open for business” and all the rest of it. Yet many small firms have faced an extra strain on their cash flow due to needless delay in this relief being provided. It makes sense for some flexibility to be allowed – that is in the spirit of localism. But that is no excuse for the long delays seen in some areas. At least the transparency shown by the DCLG means we know who the culprits are.

Will H&F Council take a Business Rates windfall while more shops are forced to close?

Property values in London (especially closer to the centre) have for years been increasing faster than the rest of the country. This means that a revaluation of Business Rates will results in higher bills in Hammersmith and Fulham – while bills will fall in, for example, Yorkshire and the north east of England.

We don’t yet know what the transitional arrangements will be. It is expected the changes will be phased in over a number of years. Nor do we yet know the impact on council finances. Initially the money is likely to be redistributed among councils so there won’t be much impact. However it is likely in the coming years Hammersmith and Fulham Council will be able to keep a growing share of Business Rates revenue.

Hitesh Jolapara, the Council’s Finance Director tells me:

“Initial figures from the Valuation Office show a 36% increase in rateable values for Hammersmith and Fulham.‎ The increase is not uniform. It will vary according to different property types, such as commercial or retail, and location and by rateable values The government are consulting on transitional arrangements that cap the level of increase in any one year. It is also not yet known what the change will be in the business rates multiplier (the rates payable is based on the rateable value x the business rates multiplier). The unknown  but potential impact on the Council finances is likely to be an increase in appeals. From a finance perspective detailed work is now in progress to determine the impact on businesses, on the council as a ratepayer and schools.”

A big increase in Business Rates threatens to drive more shops and pubs out of business. The Council could already use its discretion to cut this burden on small firms. But so far has refused to do so. It will be quite wrong, and in the long run self defeating, for the Council to allow itself a revenue windfall of increased revenue from Business Rates but with more and more shop fronts boarded up along our high streets.