The government is deep in the process of reassessing business rates and it’s looking like a complete clusterfuck for small businesses. Every seven years local business rates are reassessed by the government based on a shadowy concept known as “rateable value”, which has resulted in small and medium businesses across London facing increases up to 800% and a long trip to the bankruptcy court.
The proposed increases have miraculously incurred the wrath of the entire political spectrum from your Socialist Worker to Daily Mail reader because, for once, there is a unanimous understanding that this isn’t good for business and that decimating a high street of independent local businesses hurts the local economy, local culture and local community. And guess what, putting what’s left of a “nation of shopkeepers” out of business is the sort of thing that really winds up Daily Mail readers, and there is nothing more frightening to a Tory than pissed off Daily Mail readers.
As a result of this fantastic news, you can probably kiss goodbye to your favourite live music venue or nightclub. Vice reported that the Macbeth is facing a rates increase of 800%, we at the Lexington are staring down the barrel of a 200% increase, 100 club a 50% increase and an average increase in 45% for grassroots venues across the board. These are businesses with particularly high operating costs, many clubs and venues are forced to spend a huge amount of money on door staff, council approved private local area security who operate as a late night paramilitary bouncing force in vans and in many cases they’re forced to shell out for buffer housing to avoid noise complaints from their immediate neighbours.
So how are the rates actually calculated? The only clear criteria is that the rates are based on the value of the property where the commercial premises is located, which almost sounds fair enough. You’re thinking of a newly gentrified suburb awash with estate agents, restaurants and monied thirty-somethings, but that’s not the reality of how property values increase, they increase for everyone – not just the wanky coffee shop that sells things your mind isn’t ready to comprehend. Besides, using property prices as any form of economic indicator is absurd following the many years of exponential growth to the sector in the face of falling wages and stagnant GDP.
Secondly and probably more importantly, most small businesses are not fortunate enough to own the freehold of their site so they’re being penalised for being successful (where rates increase is turnover based) as well as being penalised for the growth of an asset which doesn’t belong to them. This is a really important point because the business is already paying a huge amount of rent to use the site (lease), often with very little long term rent stability. In the particular instance of the Lexington we’ve just been lumped with a 150% rent increase. To sum up, the only winner is the Landlord, who wins twice.
Beyond property prices the calculation itself changes based on what sort of business you are. Local councils are privately suggesting that business owners challenge their rates increases and what assumptions the VOA are making about their business. Interestingly, cultural assets like galleries and theatres are treated to rate freezes, subsidies and even reductions, a status and benefit which live venues and clubs are not afforded. Because music isn’t culture according to the official ideology of the state.
The good news is that the press and a number of local councils are railing against the government on this, so it’s really important to show popular support for your local businesses and community. There is currently a petition gathering momentum and supported by Islington council seeking a government intervention and reassessment of the how rates changes are calculated. At this time it’s important to remain vocal, whether your position is one of support for hard working small business owners, preservation of your local community or your desire to save what is left of the country’s live music culture, something which has been exported the world over as a massive part of British identity and is a way of life for many.