Independent retailers have raised concerns over the fees attached to business improvement districts, saying they are too expensive on top of business rates.
BIDs are business-led organisations funded by a mandatory levy usually of between 1% and 4% of a company’s rateable value, which provide additional or improved services to a local area including extra safety, cleaning and environmental measures and marketing. They have to be voted in by local businesses.
However, some independents have hit out at the fees, telling Drapers they are often excessive and do not provide a good return on investment for smaller companies.
St Andrews in Scotland will vote on creating a BID in October. Natalie Kerr, owner of Elisabeth May, a womenswear boutique in the town, said she was worried large multiples would push a yes vote through and independents would suffer.
She added: “What seems unfair is, if you vote no and you are outbid by the majority, you still must pay. In fact the council can summon you to court and seize assets to make you pay. Reading that eight independent businesses in the Grassmarket [in Edinburgh] have had to close as they cannot pay their levy further concerns me. Will BID be the straw that breaks the camel’s back?”
Cathy Evans, owner of two-store womenswear independent Gingers in Penarth, Glamorgan, which rejected a proposal to introduce a BID at a meeting last week, said: “The cost would have been hard for small retailers. The turnout for the meeting was really high and there was a lot of passionate debate. People felt that, for the money involved, there wouldn’t have been enough of a benefit.”
However, Lorna Fairbrother, owner of womenswear shop Lorna Ruby in Exeter, which voted for a BID to be brought in last week, had mixed views on the move.
“I’m torn. It will be good to put money back into Exeter, but our business rates are already so high it will be difficult for us. The fees won’t make much of a difference to big high street retailers and there aren’t that many independents left in our city, so we need all the help we can get.”
The government said BIDs allow the business community and local authorities to work together to improve the local trading environment. It made a further commitment to support the BID model in December 2013 and created a £500,000 loan fund to help local areas with the startup costs.
BIDs are governed by a board comprised of property owners, businesses and government officials.
High Streets Minister Penny Mordaunt said: “Business improvement districts allow local firms to club together to fund improvements to their trading environment, through a contribution on business rates, subject to the democratic check of a referendum of local businesses. No levy can be imposed without a backing of local firms in a referendum – with a double lock of a majority of both the number of votes cast, and of the Rateable Value of votes cast.”