The owner of Rugby Fitted Kitchens, Trevor Scott, is shocked by the size of his latest business rates bill and considers how local BIDs are coming in for a bit of criticism
As I write this, the lease on our new warehouse and offices is in the hands of the solicitors. Having negotiated what I think is a very reasonable rent per square foot, it came as a shock to discover we’ll be paying 56% of our rent out again in non-domestic business rates.
Other than requesting a revaluation, we have no choice but to pay it, even though we get diddly-squat in return.
I can’t even apply for Small Business Rate Relief, as this is based on the size and rateable value of the property and not the business. For Small Business Rates Relief, the rateable value ceiling is £12,000, so if yours is under this, I suggest you go to this website and check out what you can apply for.
But this got me to thinking about a little-known and less understood stealth tax that has been insidiously creeping up on all us town-centre business owners over the past 10 years.
I am referring to BIDs (Business Improvement Districts). If you run a business in a town centre, you’ve probably heard of them and are currently paying a levy into one. For those of you in the dark, I will elaborate.
BIDs are predominantly private limited companies voted in by a group of businesses and are funded by instructing the local council to collect on their behalf a not inconsiderable levy from businesses in the area. This is on an annual basis for a repeatable fixed-term contract of five years. The levy is payable by law and is used to provide extra services on top of council baseline services.
BIDs are endorsed by the Government and local councils and were introduced in the UK over 10 years ago to pick up on the increasing slack of non-baseline services that councils can no longer provide from their ever-diminishing budgets.
They are a neat and stealthy way for councils to demonstrate ‘genuine’ cost savings and help the Government meet its deficit reduction targets.
The Government is keen to give BIDs more localised powers, especially as more centralised super-councils are being created.
The current number of around 200 BIDs is set to multiply at a great rate of knots, with a further 200 in the consultation phase right now.
The not unreasonable idea being that if the local business community has a greater say in the decision-making on services such as marketing, security and cleaning, and is in control of its own money, then it must be better for everyone? Certainly the publicity put out by BID managements suggests that the ‘overwhelming’ majority of BID members are very happy with their BID.
They are run by businesses for businesses – democracy in action one would think? Well, perhaps not quite…
Up and down the UK, stories in local newspapers are showing groups of discontented BID members.
The main bones of contention seems to be the repeated accusation that BIDs do not engage with businesses adequately throughout the pre-vote consultation process, leaving many businesses with no idea they were supposed to vote in a ballot and with no idea the BID was a compulsory levy. There is also a feeling that many BIDs do not represent value for money and a there is distinct lack of transparency and accountability.
BIDs are initially voted in and then re-elected in a one-horse election campaign funded by themselves and exclusively for themselves. There isn’t a choice of an alternative BID company or type of BID offered. It’s basically Hobson’s choice – take it or leave it.
BIDs are supposed to be run by the local businesses through a board of directors. In reality, this is usually a self-elected board of volunteers made up of the local ‘great and good’ who meet up maybe four to six times per year for a couple of hours to rubber-stamp decisions already made by the salaried BID management who are actually running the company.
There is very little legal recourse if a BID member is unhappy with the way a BID is being run, as the majority are private companies and not subject to the Freedom of Information Act or local and Government ombudsman. It is naïve and unrealistic to assume that BIDs will be adequately self-governed without the checks and balances of local government oversight.
And remember, you can’t simply decide not to pay if you don’t like or agree with your local BID’s activities, as they’ll have you in court in the blink of an eye for non-payment.