Operators who narrowly missed out on business rates suspension left 'frustrated'

Operators who narrowly missed out on the business rates suspension announced in last week's budget have spoken of their frustration.

Chancellor Rishi Sunak last week announced that hospitality businesses with a rateable value of less than £51,000 would have their rates suspended for the next year.

Speaking to The Caterer, Andrew Taylor, owner of cocktail bar and restaurant Mr Fox in Croydon, who missed the threshold by £4,000, called the business rates announcement “incredibly frustrating”.

Already negatively impacted by the effect of coronavirus on his business, Taylor said: “Independent operators in towns and cities will not feel any benefit and we will be hit the worst. People will still go to locals – it’s the cities who will feel it. We’ve certainly felt the impact in the last week as we do a lot of corporate bookings but people are now working from home and not coming into town. Croydon was eerily quiet on Saturday night -Thursday night was a disaster as well.”

Taylor went to on say he predicted “massive casualties” with so many businesses already “on the edge” and that the leisure landscape will “change without a doubt”. He has already started to fill out the paperwork for a rates review but from what he’s heard from others in the industry, he doesn’t expect anything to happen quickly. “It’s definitely not made simple but employing a rates specialist is going to cost money,” he told The Caterer.

Predicting a rough ride ahead, he said he had sat down with staff at the weekend and asked them to fill out “survival budgets” that they would need to cover their rent and bills in the worst case scenario. “I understand there needs to be a mark set but it would be a massive help, no matter what size the business is, if rates were relieved,” he said. “This is too, little too late and the government is just delaying the process of being in debt. It needs to be a grant or a relief.”

His comments come after UKHospitality called on the government to step up its support for businesses as the effect of coronavirus continues to spread. Kate Nicholls, UKHospitality chief executive, said that the hospitality sector is facing a “unique short-term cash-flow catastrophe as customers are advised to stay away.” She urged the government to support businesses of “all sizes” through this period so that operators can bounce back and continue to be at the heart of communities.

Other operators with multiple sites reported that the business rates announcement benefited only some of their sites. Speaking to The Caterer Craig Bunting, co-founder of Midlands-based BEAR, said that on the whole his business will be affected in a positive way as most of his stores will meet the criteria for the relief. However, his company has two sites in Derby: one in Iron Gate, the city centre, and one in indoor shopping centre Intu. Despite having similar turnovers and being similar sizes, only the Iron Gate site will benefit from the rates relief; the Intu site’s rateable value is over three times higher.

Despite his sites being operated by a single business, Bunting said the rates relief made the “very crude assumption” that the rateable value determined whether a business is small or not. “Yes, we have been positively impacted by the exemption but one of our sites is significantly different,” he said.

National chairman of the Federation of Small Businesses (FSB), Mike Cherry, presented a more optimistic view, saying: “Suspending business rates for small high street firms is a huge bonus for our town centres and high streets. Together with extra cash for those that already qualify for small business relief, this shows a real commitment to supporting small businesses at the heart of communities.

The business rates suspension would do little to save businesses hardest hit by the impact of coronavirus in London which has an average rateable value of £64,000. The average rateable value for businesses across the whole of England is £33,000 with the South West region averaging the lowest at £23,000, according to 2018/19 data published by LG Inform.