Government must address business rates and rents if lockdown restrictions continue
- Credit: Archant
Following lockdown, many businesses small and large are experiencing difficulties.
I discussed the experience of a small trader in Hampstead during lockdown and this is what he told me. His rateable value for business rates (broadly equivalent to his rent) is £50,000. Business rates are £25,000. The government gave an immediate grant of £25,000 after lockdown.
A business rate holiday for 12 months from April onwards was welcome. VAT on food was reduced from 20% to 5%. Some traders passed all or some of those savings on to customers but many did not. Many landlords did not give rent reductions. Any rent which was paused has to be repaid.
Small businesses such as restaurants are on 30-day payment terms and sums owing to creditors from one month to the next can amount to £20 – 30,000. When a restaurant is open it has cash income to pay its suppliers but when it is closed cash is zero and suppliers chase for payment. Many traders used the government grant to pay their suppliers so that suppliers would fill their orders when they could open again.
The FCA (Financial Conduct Authority) took insurers to court over non-payment of business interruption insurance to policy holders and won. While a lifeline to many, such payments go on rent to avoid eviction proceedings by landlords.
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No-one knows what the future holds or whether our economy will bounce back. The six-person restriction hurts the hospitality industry and only those with deep pockets are likely to survive.
The government must address the rent and business rates on a continuous basis if lockdown restrictions continue, including shifting the business rate burden to online businesses in a fair way and quickly, otherwise many businesses big and small will not make it through the next six months. The high street simply no longer has the footfall of days of old. With incomes challenged, customers are attracted by cheaper prices.
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But it is important to support the small traders in our midst, such as the hardware store on Heath Street, the butcher on Rosslyn Hill and the restaurant at 28 Church Row.