How new rates rises could shut Fylde coast businesses down

The Venue Cleveleys
The Venue Cleveleys
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As businesses come to terms with the Government’s revaluation of the business rates, some are warning that the controversial tax could see many across the county closing their doors.

The rates, the commercial equivalent of council tax, have not been changed since 2010 when they were based on property rental values from 2008.

Babs Murphy of the Chamber of Commerce

Babs Murphy of the Chamber of Commerce

Now, with property prices stagnant in some areas but rocketing others, the work carried out by the Valuation Office Agency has resulted in a reduction for many but a dreadful and potentially business threatening shock for others.

Blackpool has seen a general fall in business rates for most although some licensed premises have suffered.

However, in other areas such as Cleveleys under Wyre Council and for many rural businesses, the changes in the rates have hammered some prominent businesses.
Wendy Bickerstaffe from Knuckleheads play centre in Celeveleys said the impact could force them out of business.

She said: “When we got our revaluation we just felt sick. There is no way we can pay this.”

The controversy was so great the Chancellor was forced to act and stump up £300m for a rates relief fund, but details of how that is to be distributed are yet to be announced with the General Election pending.

And a major problem is that if a business appeals against their revalued rates, it is likely to take three years for it to be heard due to massive cuts to staff in the civil service.
The Federation of Small Business (FSB) warned that some face ‘astronomical increases’.

A business rates survey undertaken by the FBS earlier this year found that of the small businesses it spoke to, almost a third of firms across the North West (29 per cent) expect their business rates to increase.

Of those expecting an increase, the majority, 62 per cent, expect to reduce profits and 57 per cent are set to increase prices. One in five may even consider selling or closing their business.

The FSB welcomed the £300m fund to help those facing the biggest hikes but urged councils to distribute the money as speedily and fairly as possible ‘to end the uncertainty and anguish being felt by thousands of smaller businesses’.

When the rates were introduced on April 1 Mike Cherry, FSB national chairman, said at the time: “Today’s hike in business rates will leave many UK entrepreneurs considering the future.
“Despite welcome interventions from the Government at the Budget, small firms in pockets throughout the country are still vulnerable to staggering increases.

“Our research shows that over half of small businesses experiencing an increase expect profits to fall. One in five may ultimately consider closing down or selling their business as a result of their valuation.”

For businesses hit badly in the North West the £300m relief package will see £22.2m being allocated to the region. Meanwhile London will receive the ‘lion’s share’ of discretionary support at £124m as occupiers in the capital will have seen an increase in their rents. In areas where property prices have fallen, rates will be lower.

In theory the revaluation should make the system fairer by ensuring business rates reflect the property market with rates bills actually coming down in some parts of the country.
Business rent and rates experts CVS also called on councils to distribute the relief as ‘urgently as possible’.

The sudden hike in some people's rates has been felt across the county.

Norman Tenray, the managing director of Longridge-based building supplies’ firm, OBAS UK, said the delay caused by the election to the £300m package promised by the Government would hurt many firms.

He said: "There is potential for this delay to last several months and that is simply unacceptable to businesses struggling with the impact of rates revaluation.

“The fund promised to protect affected businesses was ready for implementation and now, due to no fault of their own, those hardest hit will be the ones which shoulder the burden.

“I would call on whichever political party forms the next Government to make this a priority and allow small businesses in places like Lancashire to prosper and grow.”

One set of businesses hit by the rises have been stables and liveries.

Derek Bolton, who has run Bluebell Liveries in rural Lancashire for the past quarter of a century, is one of the many businesses across the county to be hit hard by the shake up.

The overhaul of commercial tax charges, which were introduced in April, has seen his rates rocket more than 1,000 percent.

He said: "“Its outrageous, my business can’t afford that. It will bankrupt me.”

Recognising the role local pubs play in communities, a £1,000 discount has been made available during 2017 for pubs with a rateable value of less than £100,000 – 90 per cent of all pubs. But many publicans say it is too little too late.

One director of a pub group in Leyland has even created a beer to draw attention what he sees as “disproportionate” business rates.

Lee Forshaw, director of the Withy Arms Group Limited has commissioned a beer called £331 - the amount he has to pay in business rates every week.

But the Chamber of Commerce for North and Western Lancashire based in Fulwood has found that many of its members have welcomed the revaluation because their rates have dropped.

Babs Murphy, chief executive of the Chamber of Commerce said: “With any business rates revaluation there will always be winners and losers.

“The reduction in business rates however is great news for thousands of small businesses many of whom have been taken out of the system altogether.

“Last year we were pleased that the chancellor heeded our calls to avoid higher business taxes and costs, and moved to lower them in a number of areas.

“The measures taken has been viewed by many of our members as a welcome and important step on the road to essential reform.”

Jakki Slack who runs The Venue on the front at Cleveleys said the rates issue could drive many out of business.

She said her own rates were going up by 25 per cent to £112,500 which was more than she would pay in rent or mortgage on the popular venue.

She said: “I challenged my rates in 2015 and got them reduced but it cost me £25,000 to do so. Now they have put them up again”

She said at the time the valuation officer admitted he had overvalued the rateable value of her business but it cost a fortune to fight it. She said: “What this is doing is making businesses up and down the country un-sellable. That is why you are finding so many pubs going out of business, they say its about four a week, instead of being sold on.

“I have been here 17 years and employ 30 plus staff and I cannot invest in the business.

“I am appealing against this but have been told that the Government has cut the number of people in the rates department by a third which means it takes three years to come to appeal.

“There have already been 250,000 appeals put in since April. By the time people get their appeal many of them will have been driven out of business. It is simply not fair and something has to be done.”

Jakki's business neighbour Wendy Bickerstaffe from the Knuckleheads play centre based at the former Ice Rink in Cleveleys said the rates revaluation had been a disaster from many businesses.

She said: “When we got our revaluation we just felt sick. There is no way we can pay this.

“When we took over in Autumn last year we were told the rateable value would be £35,000 based on the Ice Rink’s rent and turnover and we therefore thought it would probably come down from that as our turnover is nowhere near that.

“At the end of November it had gone down to £28,000. In February we got a visit from the VOA and the man said it would probably come down but when we got the letter it gave our rateable value as £68,000. The we checked online for April and it had gone up to £95,000. It is appalling.

“We are appealing but that could take three years which is not fair. If it stays at £95,000 we will have to shut our doors.

“It is sickening as we invested hundreds of thousands of our own money to refurbish this building to get Knuckleheads going and simply did not budget for these rates. It is not sustainable and we will not be able to pay.”

See also: Rates changes could be bonus for Blackpool