Rates discount plan for Acomb may miss target

Dumping on Acomb shops car park

Dumping on Acomb shops car park

The Council may decide on Tuesday to introduce a 50% discount on Business Rates for any “empty” shop brought back into use in “Acomb”. The discount would apply for up to 18 months.

The Council still continues in a state of denial about public service standards in the Front Street area.

Weeds, potholes, litter and graffiti all add to the “run down” appearance of parts of the area.

Weeds taking over several streets in Acomb

Weeds taking over several streets in Acomb

Now the economic recovery is well established  properties are already being brought back into use. There are currently only 3 premises in “Acomb” which have been empty for 12 months or more.

The proposed discount scheme is similar to that introduced by the Coalition Government last autumn which awards 50% relief after a shop, that has been empty for 12 months, is reoccupied.

The Coalition Government had previously given powers in April 2012 to Councils who wished to extend Rate discount schemes to commercial premises. Quite why it has taken the York Council over 2 years to consider using these powers in Front Street has not been explained.

The Council will now consider making the 50% discount available to premises from the moment that they become empty. Although it is intended to fill the gap in provision for the period up to 12 months (when the mandatory government scheme kicks in) there is clearly a flaw in using taxpayers money to subsidise national chains who move into  prime sites immediately leases become available.

No doubt their shareholders would be delighted to receive a profits boost of this sort while existing shops might rightly brand the subsidy as unfair competition.

A more sensible approach would be for the Council to focus its discounts on properties which have been empty for over 3 months.

Business rates are not payable on a commercial property for the first 3 months that it is empty anyway.

Empty properties with a rateable value of under £2,600 are entirely exempt from Business Rates

The terms for the discounts in what the Council labels the “Acomb Business Development District” appear to have been thrown together in some haste.

  • The area that the discount will apply within is not defined (the Council papers refer only to “Acomb”)
  • The Council scheme is restricted to retail premises. The government scheme applies to all businesses
  • It is unclear how the temporary occupation of shops (so called “pop up” units, display only exhibitions and voluntary organisation use) will affect entitlements.
  • Para 15 of the paper suggests that applications have to be linked to “the three ambitions set out above” These refer to young enterprises, listed buildings and re-locations
  • The paper also suggests that applications will only be considered once a year with a September deadline (!)

Footnote

  • Small retailers are entitled to £1000 off their Rates (Rateable value of £50,000 or less) although not all traders have, as yet, applied for this discount.
  • Rates relief is available for existing small businesses (premises with a Rateable value of less than £12,000)
  • Charities and amateur community sports clubs get at least 80% Rates relief

Government scheme to see £1 million reduction in York Business Rates

£1000 a year benefit for York businesses

List of qualifying business types. click to enlarge

List of qualifying business types. click to enlarge

The Government announced in its Autumn Statement on 5th December 2013 that it will provide relief of up to £1,000 to all occupied retail properties with a rateable value of £50,000 or less in each of the years 2014-15 and 2015-16.

Potentially as many as 1700 York businesses could benefit

The purpose of this new relief is to support the ‘high street’ which has been affected by changes in consumer spending preferences such as online shopping. The relief is temporary for two years from April 2014.

A wide range of businesses could qualify for the reduction (see list right)

Areas like Front Street in Acomb are likely to benefit from the scheme.

It will be necessary for any business wishing to claim this relief to make an application to the council and complete a state aid declaration form.

More York companies to get rate relief?

Cabinet to decide individual applications

The York Council is set to make available Business Rate reductions for “young” businesses. The businesses must be independent and less than 2 years old. They would enjoy a 50% reduction in rates payable during the first year.

Tax haven

They must be operating in one of the following sectors.

  1.  Bio-medical/sciences
  2. Agritech
  3. Insurance & Professional Services
  4. Rail & related industries
  5. Business software innovation
  6. Creative medicine

The scheme will also apply to proposals to bring empty Listed buildings back into commercial use AND MAY BE EXTENDED TO COMPANIES WISHING TO RELOCATE TO THE CITY.

With the local economy in danger of overheating – early in the economic recovery we are already approaching full employment – the scheme is not targeted on depressed parts of the City.

Local shopping centres like Front Street have fared poorly in recent years. The last thing that businesses in locations like that need is subsidised competition.

The scheme has also been criticised as the plan is for decisions, on which companies will get the award, will be taken by a single party committee (the Councils “Cabinet”).

Companies that apply are not required to reveal what donations to political parties they have made or are planning to make.

The Council has not revealed how much the discounts will cost. The total amount of state aid to an individual company under EU regulations is limited to € 200,000.

£16 million owed to York Council

The Council has published a list of the outstanding amounts owed to it in each of the last 3 years.
Uncollected debts
The size of the debt shows an upward trend which could lead to cash flow problems if not reversed.

Although many of the debts will eventually be recovered, some will not.

There have been significant increases in the amounts owed on business rates, former tenant arrears and sundry debts.

In total the amounts owed have increased from £12 million to £16 million over a 3 year period.