Business Rates rises could threaten Haringey’s economy
Changes to central government’s business rates risk leaving some of Haringey’s independent companies struggling in the face of huge cost hikes, according to analysis by the council.
The worst hit local firms will be facing an eye-watering 42 percent rise in their rates for 2017/18 following the government’s national revaluation of business rates, which sets rates according to the rental value and size of business premises. Hundreds more will be hit with a 12.5 percent increase, while thousands will see rates rise by an inflation-busting five percent.
Shops, pubs, industrial units, warehouses and even schools could all be impacted, with shops on the most expensive high streets set to see their rates leap next year, with further rises to follow in 2018 and beyond.
The council and local traders’ groups are joining calls for the government to hold fire on introducing the increase – or to at the least reduce rises this year – to allow more time to ensure it doesn’t threaten economic growth in Haringey and across London. They also want to see additional tax relief for local businesses and councils given the power to set local rates.
Council Leader Claire Kober argues that pegging business rates to a national property valuation system values fails to account for the sharp increase in Haringey, where firms’ profits have not kept pace with rising land values.
Cllr Kober said: Local businesses are the lifeblood of Haringey, which is why we have a robust package of measures to support companies across the borough.
“We’re hugely concerned about the potential impact of the government’s national revaluation system, which fails to recognise the implications of rising property values in London and would serve to penalise those businesses that are at the very heart of Haringey’s strengthening economy.
“Rather than rush into this, we want the government to pause and think again so that we can be confident that local businesses will not collapse under the weight of fresh financial pressures.”
Instead of adopting a blanket national approach, the council wants to see a regional system for setting business rates, with local government given control over business rate levels, property valuations and local business rates relief schemes as part of the wider devolution of business rates.
This would allow Haringey to work hand-in-hand with local businesses to design a system that is robust enough to help fund local services; responsive to local economic circumstances; fair to small businesses and not-for-profit organisations; able to support local industrial growth and stimulate regeneration, and accountable to local business rates payers.
As part of the council’s efforts to ease the impact of the transition on local firms, it will automatically apply small business rates relief to the bills of all eligible businesses – meaning around £7million in relief in 2017/18. That comes on top of measures already in place to offer charitable relief to a wider group of voluntary and community groups as well as registered charities, and a discretionary relief scheme that offers discounts to businesses occupying new offices, workspace and creative studios being built in Tottenham and Wood Green.
Roger Ward, Chair of the Haringey Business Alliance, said: “Come on Whitehall, give Haringey local businesses a break. Your proposals are plain daft. Nearly 70% of Haringey’s local trade is carried out by small independent businesses. These dynamic entrepreneurs are the ones keeping our vibrant high streets alive. They employ thousands of borough residents. It is these hard working staff and owners that open the shops, retail outlets, pubs, garages, cafes and restaurants all day and night 365 days a year.
“On current projections Haringey’s business sector will contribute up to 50% of the borough’s total income by 2020. But that figure will collapse dramatically if the government’s national revaluation goes ahead. There is simply no way the projected massive business rates increases can be afforded by hundreds of Haringey’s independent businesses. So, please think again. Here is the Haringey Business Alliance suggestion – start real negotiations with the Local Government Association and the business sector. Together we can easily find a better solution.”
Following the government’s national revaluation, businesses will be categorised according to the value of their property.
Haringey is home to more than 6,900 business premises, the majority of which will see a five percent increase in business rates in 2017/18.
783 Haringey businesses will see a 12.5 percent increase. 32 will see an increase of 42 percent.
Transitional relief – which caps year-on-year increases – will be applied to affected businesses to ensure that rises are set to the three levels above, but those whose premises have been valued highly will see further increases in subsequent years.
Some examples of how the change will affect Haringey businesses:
Medium sized retailers in high streets in Wood Green, Muswell Hill and Tottenham will see an increase of around 20 percent, capped to 12.5 percent in 2017/18 but rising again in April 2018.
Retailers in prime locations, such as Crouch End, will see steeper rises of more than 30 percent due to an increase in commercial rental values
Independent stores, chain stores, restaurants, cafes and services will all be affected
Large industrial parks and warehouse space – such as those at Mill Mead estate in Tottenham Hale and Garman Road in Northumberland Park – will see large increases that could translate to tens of thousands of pounds in additional business rates
Haringey’s pubs will see some of the biggest increases in business rates
Some public sites will also be affected – including GP surgeries, children’s centres and schools
Haringey Council applies a number of business rates relief measures:
Small Business Rates Relief – the government has raised the threshold for small business rates relief, meaning more will be eligible for support. Haringey estimates around £7m will be given out in 2017/18 (compared to current levels of around £4.5m). The council will automatically apply small business rates relief to the bills of businesses we expect to be eligible, and is calling on the government to meet the costs of this.
Transitional Relief – government caps on year-on-year increases following revaluation. However, these still range from 5 percent to 45 percent. The council expects Transitional Relief in Haringey to be around £10m and is calling on the government to both increase the amount of transitional relief offered and to compensate local government in full for applying transitional relief.
Charitable Relief – registered charities are entitled to an 80 percent discount on business rates. In Haringey, around £6.5m of charitable relief is paid annually, and the council operates a broader scheme that includes a wider range of voluntary and community sector organisations.
Discretionary relief for new or converted officer and workspace – in April 2016, Haringey took the step of introducing a new discretionary rates relief scheme to promote local economic growth. Businesses that occupy new office, workspace and creative studios can apply for 30 percent relief for the first three years.
In 2015, an option for local businesses to spread rates payments over 12 months rather than 10 which all ratepayers are entitled to.
London Councils, the Mayor of London and other London boroughs are also calling on the government to think again on business rates revaluation.
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