On Saturday 2 May the outline was announced around new discretionary, flexibility given to local authorities in England to allow them to be able to pay similar grants to small businesses who have been denied support from the existing business rate linked schemes. For example, B&B owners who pay Council tax rater than business rates or retailers where the rates are paid by the landlord as part of their rental agreement. A sum of £617m, the equivalent of a 5% addition on the funding already made available, has been allocated to support this. Councils will find out later this week how much they are each being allocated.
It is important to read the news release (link below) and for the time being at least take from it only what it actually says. I believe it says it will be down to each individual Council to create the criteria and, thus I assume, to juggle the resulting finance consequences of their potentially complex decisions. Unless I am wrong, or I am right but the intent changes, my gut instinct suggests that might be fraught, particularly, at the fringes of any locally set definitions and cutoff points.
Again by way of example: we will all know of long established B&B and guest houses which have been left high and dry by their past decision to pay council tax rather than business rates; rates which ironically have been waived entirely for several years now for those with rates valued at under £12k, tapering upwards for those with a value under £15k and, which in any case, are now been waved for all business for the rest of the year. At the same time, we also know that there is a whole raft of Airbnb type business, many operating completely off the local radar. Some renting a spare room, apparently for extra pocket money, other seeming operating as fully fledged businesses, in either the serviced, or more often, unserviced accommodation markets.
Until Saturday’s announcement unless those in the sharing economy were paying business rates, they too were exempt from support. Going forward, should there be any differentiation between the broadly known numbers older business types and a potentially large and unknown number of new businesses types? Or within that, differentiation between genuine sharing of a spare personal assets and traditional trade by a new backdoor/new technology route within the umbrella of “the sharing economy”? With limited resources to service any consequence demand created, how do Councils set fair and reasonable local rules and who picks up any overspend if they inadvertently miscalculate the base assumptions? Almost certainly the individual authorities?
Or put more simply: the devil is going to be in the detail which is going to be far more complex than it might a first seem. That detail is likely to interpreted very differently in different Council areas and, as a consequence of both these factors, is also unlikely be agreed and announced that quickly.
Although potential very welcome news for some very worried local businesses, I would be reluctant to offer potentially false hope, too soon. I hope I’m wrong about feeling the need to offer you this note of caution, or to suggest it might be worth tourism managers proactively engaging in the process of helping to defining any news local rules, if of course you are not already fully engaged in such local processes: