Joel Davidson is a former councillor in Brent and was a London Assembly candidate in 2016. Amir Sadjady is a Conservative activist in Hammersmith.
Having worked and lived in London all our lives, we can’t remember a time when the high streets which we know and love have struggled so much.
Much of the problem lies with the current system of business rates in the capital, which is manifestly not fit for purpose, and can only be fixed by determined Government action. Despite accounting for only four per cent of total tax revenue, it still accounts for 20 per cent of local government funding, so the impact of a system which is distrusted and ineffective remains significant for London’s economy.
The current system of appeals to the Valuation Office is opaque and complicated, and as we have seen first hand in Hammersmith and across London, it is not correlated to a business’ ability to pay.
Last week, we visited a small 200 yard stretch of King Street, and counted ten empty shops in that small area.
We also researched the business rates of these empty shops, and found that in each case the business rates were set well above the current threshold of £12,000 needed to qualify for small business rate relief. Clearly, the extra cash flow required to pay these rates on top of rent and the large array of other costs which small businesses are assailed by in this city is too much, and so these sites are simply unviable.
This is extraordinary given the location, literally outside the town hall and in one of the prime residential and retail areas of London. The knock-on effects of empty shops are severe for the local area, as rubbish, crime and anti-social behaviour inevitably replace the lost commerce.
Given the welcome news that the Prime Minister has announced that the era of austerity is over, we firmly believe that the time is right for the Chancellor to take decisive action to help our struggling high streets, particularly those in London which are suffering so much at present.
We urge the Chancellor to consider enacting the following decisive policies:
- Devolve the Valuation Agencies, and create a London Valuation Office that is administered by the Mayor’s office, with a specific remit to set rates that foster small business growth and high street rejuvenation across the capital
- A three year business rates holiday for any business with a turnover below £1 million p.a
- The raising of the business rates threshold for small business rates relief from £12,000 to £100,000 for a three year period
- An urgent and comprehensive review on taxation of small business in the UK, with focus on how the state should facilitate growth in these businesses above all other factors.
We see a lot of potential in shifting the focus of business rates away from the complicated valuation of a premises, which is affected by a range of factors outside the control of a business, to a revenue-based system. Were businesses taxed in the form of a local revenue tax, with a percentage of, say, two per cent of annual turnover used, then we would see benefits for small businesses in high value locations, such as on King Street, and lot more of the empty shops would be filled with commercial activity again.
We would also begin to see local tax revenue raised in proportion to levels of local economic activity with this approach, which would be invaluable in holding local politicians to account. As things stand, the mayor has been completely useless in even attempting to rejuvenate high streets or business activity generally in London because no one is expecting him to; given the number of areas which Khan has failed on, we shouldn’t be letting him get away with yet another dereliction of duty.
However, we must accept that it is not all on our useless Mayor; as Conservatives we find it troubling that the Government is not doing its utmost to help small business, which is the lifeblood of our economy and indeed is in the very DNA of this proud nation of shopkeepers.
By taking radical action now, we can once again restore confidence in the electorate that we genuinely are the party of business.