A popular local bakery in Brighton and Hove, Bagelman, has three coffee shops across the city, providing jobs for 30 people.
Since the coronavirus crisis began, its takings have fallen by more than a third – even though, as a food retailer, it has been able to stay partly open. Ten members of staff have been furloughed, bounce back loans applied for, rents renegotiated and bills deferred.
The lifeline that Bagelman’s owner, Jo Prior, has been able to cling to is the business rates holiday, announced by the Chancellor at the start of the crisis last March.
It spared her a £30,000 rates bill last year. But it is due to end on March 31 and, unless Rishi Sunak steps in and extends it, tens of thousands of businesses like Jo’s across Britain could face ruin.
There is plenty of pressure on the prime minister to lift lockdown and re-open the economy as soon as possible, not least from the lockdown sceptics in his own party who aren’t bothering to wait for the scientific data on the impact of the vaccine rollout: they’re demanding that all restrictions on hospitality venues are lifted by Easter and the others gone by the end of April.
Small businesses like Bagelman want to be able to reopen fully. But the idea that as soon as they do, businesses will just bounce back overnight is unrealistic.
There are some sectors that might see trade back to pre-crisis levels within a few days of re-opening. But for others, it’ll take much longer.
Another business owner in Brighton, Peter Allinson, who runs the creative Whirligig toyshop (takings down 60% this year), thinks it’ll be at least two years before his business gets back to normal with only a gradual build-up of footfall.
If small businesses are to survive, they need to be able to plan for the future and for the business rates holiday to be extended for another year. If it isn’t, the hollowing out of our High Streets could accelerate, leaving empty shells at the heart of our communities.
And that raises another issue: the unfairness of the business rates system.
Shops keep our town centres alive and provide a service for people whether or not they have internet access. Yet thousands of them are being put at risk because of the unfair tax advantage enjoyed by online retailers, regardless of their size and turnover.
In 2019, it was calculated that just seven department stores in London’s West End paid more in business rates than Amazon, which had sales of nearly £9billion. That is not a level playing field.
Even though business rates on out-of-town warehouses have begun to rise, it’ll be many years before they are comparable with those on the high street.
The Chancellor is reported to be looking at an ‘excessive profits tax’ targeted at companies like Amazon which have seen a huge spike in profits during lockdown. But this can’t be a one-off measure. The system needs to change to keep up with the way consumer spending is changing.
Michael Ward, the managing director of Harrods (one of the aforementioned seven stores), warned in 2019 that high streets would start disappearing from the UK unless something was done to redress the balance. We are starting to see that warning take shape, accelerated by coronavirus.
In just the past few months, Debenhams, many of House of Fraser stores, and those from Sir Philip Green’s Arcadia group have shut their doors for good.
Business rates are an important part of a council’s income. But the tax burden needs to be more fairly shared, and the social value of high street shops and hospitality venues has to be recognised
In Brighton, we’re also losing some of the small, independent shops that are so important for our economy and give the city its very special character.
The leaders of some of the UK’s biggest stores, like Tesco and B&Q, have now warned the Chancellor that thousands of jobs could go if the system isn’t reformed.
Business rates are an important part of a council’s income. But the tax burden needs to be more fairly shared, and the social value of high street shops and hospitality venues has to be recognised.
It may be that local authorities need to start re-imagining high streets as places for people to gather and not just as shopping venues.
And in the meantime, small businesses that have tried to weather the coronavirus storm need to know that the lifeline of a business rates holiday is not going to be snatched away from them in the March budget.
Bagelman owner Jo says another year’s relief could be the difference between saving her business and losing it. The Chancellor needs to listen and take action in next month’s Budget.
Do you have a story you’d like to share? Get in touch by emailing jess.austin@metro.co.uk.
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