In the nearly three years I’ve been responsible for the council’s economic development function business rates have been one of the most consistently raised concerns. Business rates are set centrally by the government, but they make the council collect the money on their behalf. If anything this makes businesses even more aware that they don’t benefit from being based in an efficient borough like Wandsworth: residents get a low council tax and excellent services, businesses pay central government taxes and do not benefit from many council services.
This year was promising to be particularly bad, because it marked the end of transitional relief. Commercial properties were revalued in 2005 with some local businesses seeing their rateable value double. Transitional relief was introduced for four years to soften the impact. However, this meant rises were limited in 2006, 2007 and 2008, but any remaining transition would be in one fell swoop in 2009.
Amazingly, the government didn’t see this coming! In Wandsworth businesses faced their rates doubling, trebling and even quadrupling overnight. And it couldn’t have come at a worse time, in a recession small businesses – who often operate on small margins at the best of times – were facing disaster.
The council had been calling on the government to extend transitional relief, and the government has belatedly listened. Sort of.
Businesses will now be allowed to defer the some or all of the increase and pay it over the following two years (2010-11 and 2011-12). Of course, it might well be this is just deferring the problem if the recession is still creating a difficult trading environment, but we have to take what we can get. Given that this problem has been four years in the making we should be pleased the government has been able to cobble something together at the last minute (although still not in time for the start of the financial year, businesses will have to pay a few months at the increased rates) we should be grateful.
Wandsworth has also been promoting small business rate relief. So far nearly 2,000 companies have benefited by over £1,000,000 in relief. If you think you might be eligible you can find out more on the council’s website.