Philip Hammond will announce the Spring Budget for 2017 this coming Wednesday, and it could carry announcements that change the fate of many small businesses in the UK.
The business rates hike posed by the government has caused a stir of criticism, with fears that the increase could be crippling for businesses not just in London, but across the whole of the UK. When Camden Town Unlimited helped to fund research by the Federation of Small Businesses, we aimed to uncover evidence that small businesses who are vital to our economy would be forced to consider closing down or selling their businesses as a result of the increase.
36% of the businesses involved expected to see rates increase – more than half of those expected profits to fall, and 38% were preparing to increase prices. The research concluded that UK productivity and growth would take a hit.
In Camden Town we are lucky to have a varied business community, a large portion of which are independent and small businesses. We are able to point to first hand experience of how vital these SMEs are to the local economy, to building a unique reputation and boosting the local trading environment. Businesses in the nighttime economy also seem to bear a disproportionate share of the overall business rates intake – again, the economic health and vitality of some areas relies on their bars, restaurants and pubs. The business rates hike gambles on the importance of this sector. It’s hard to estimate the extent of the damage if some areas were to lose a significant portion of it.
…and after weeks of controversy around business rates, the Government is under pressure to react. We are anticipating an announcement that will soften the blow to small business, but there are calls for a more dramatic and far-reaching overhaul of the system.
Adjusting the threshold for business rates relief would capture a higher number of small businesses and allow them to operate without this additional pressure until they are more established. Extending the rates relief to coworking spaces would also encourage the introduction of open workspace, which we argue would be key to improving the chances of success for startups. Their contribution to the local economy, once operating, cannot be understated and we see its effect in Camden Town quite clearly.
Camden Collective has used vacant spaces in Camden Town to introduce numerous young businesses to the area. They have brought with them a positive economic uplift and helped to support other small businesses nearby such as cafes, restaurants and pubs. They bring investors and business leaders to Camden, helping to promote it as a vibrant and exciting hub for small creative startups. They build an affinity to the area and once they are ready to move on from free desk space, often look to rent an office locally.
The value of SMEs and startups shouldn’t be underestimated, and areas that lack this community should be looking for ways to attract it. Business rates should not penalise these businesses for operating in London – it should reward and encourage them.
We wait with hope for a Spring Budget that supports businesses of all sizes.
Simon Pitkeathley calls on Labour to address a radical reform to business rates, and rebuild their connection with the business community – Via Labour List.
FSB conducts research in to the need for a business rates overhaul in the Spring Budget – via FSB.org.