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Sadiq warns 'London's high streets under threat' due to business rates
- Mayor highlights three London shops set to be hit by large increases
- Government’s move presents ‘clear and present risk’ to businesses
With increased business rate bills landing on doorsteps across the capital, the Mayor of London, Sadiq Khan, has warned that “the very nature of London’s high streets is under threat.”
The Mayor is particularly concerned that many small, independent companies who have worked hard to build up their businesses over many decades, could be forced to close for good as they will be unable to pay new business rates bills that are rising by up to 45 per cent.
According to Government data, London’s businesses are facing a £900 million business rate hike as a result of the revaluation, to fund an equivalent tax cut for the rest of the country. That figure could eventually rise to £1.2bn.*
The Mayor has highlighted the plight of three independent businesses in London who are all coming to terms with their increased business rates bills.
Gareth Jones owns the chocolatier, Alexeeva Jones, on Westbourne Grove, Notting Hill. He has seen the rateable value of his premises increase from £52,000 to £87,500.
The rateable value for the shop is over £1,500 per square metre – more than five times the charge per square metre levied on the offices of leading global companies in central London.
Its actual rates bill, after the transitional relief announced by Philip Hammond, the Chancellor, in the Budget, will rise by around 15 per cent this year from £26,000 to more than £30,000 – and to at least £42,000 by 2021.
Noah Crutchfield owns three shops in Hackney, including the Maiden store on Shoreditch High Street, which opened in 2009. The shops sells a diverse range of items for people of all ages including kitchenware, lighting, toys, jewellery and books.
Under the new revaluation, the rateable value of Maiden will increase from £7,200 to £18,000. Noah faces a 60 per cent rise by 2021 – around £10,000 under the transitional relief scheme before inflation.
Katrina Phillips whose family has been trading from the same shop on Portobello Road, in Notting Hill, since 1963. Katrina runs a shop that sells things that are ethically produced, old, or by artists.
She has seen the rateable value of her premises increase by more than 55 per cent, from £33,500 to £52,000 through the recent revaluation and as a result her business rates bill will increase by more than £10,000 over the next five years.
The Mayor of London, Sadiq Khan, said: “When small companies just like these open their new business rates bills they will be faced with a clear and present risk to their very existence.
“These dedicated business owners have dedicated their lives to running successful business that are part of their communities. They have toiled through thick and thin. Their stories highlight not only the impact these business rates hikes will have on London’s economy, but the human cost too.
“The very nature of London’s high streets is under threat. What we need is full devolution of business rates to London with genuine protections in place so we can safeguard businesses like this which are part of the fabric of what makes London such a vibrant, diverse and successful city.”
Sue Terpilowski OBE, London Policy Chair Federation of Small Businesses, said: “FSB London fought hard for a concession at the Budget that will impact small businesses. However, the lingering concerns still remain that the average micro business in London will have to find thousands of pounds a month to cover the increase in business rates, alongside £2,600 in additional employment costs in 2017/18 and a further increase in pensions auto-enrolment costs.
"We need to realise that the hard costs of operating a business in the capital are starting to outweigh the benefits which simply does not make economic sense.”
While the Mayor has welcomed plans to alleviate the impact of the increases announced by the Chancellor in last week’s Budget, he does not believe they go anywhere near far enough.
To compound the misery for businesses, bills that are currently dropping through letterboxes will not reflect these new reliefs and businesses will have to pay their bills on the basis of the pre-Budget figures until local authorities have received the necessary detailed guidance from the Government.