Friday, 16 August 2013

Why a Large Retail Levy is not right for Bristol

Councillors on the Bristol's Overview and Scrutiny Management Board met yesterday to follow up a motion passed at Full Council in June that called for the council to explore the possibility of seeking the powers for an additional Business Rate Levy on large retail units.

The proposal was rejected by all of the committee bar the Green Councillor, and the report back to full council will be, it seems, a brief affair. No matter, here a few comments by way of history and analysis.

The original motion, which was proposed by Greens, was as follows:
Bristol City Council notes the campaign being run by 'Local Works' entitled 'Save our communities from large supermarkets'.
The campaign specifically asks councils to submit the following proposal under the Sustainable Communities Act:
'That government gives local authorities the power to levy a new local rate of 8.5% on large retail outlets in their area with a rateable value not less than £500,000 and the power to use the revenue collected to improve local economic activity, local services and facilities, social and community wellbeing and environmental protection.'
Council notes that - within Bristol - such a levy could raise up to in the region of £1.6 million pa.
Bristol City Council welcomes this proposal and fully supports it and therefore calls on the Mayor also to support it, and to submit the proposal to government.
Prior to the meeting, however, this had been reworked to obtain cross-party support, so that the motion as passed read:
Bristol City Council notes the campaign being run by ‘Local Works’ entitled ‘Save our communities from large supermarkets’. The campaign specifically asks councils to submit the following proposal under the Sustainable Communities Act:
‘That Government gives local authorities the power to levy a new local rate of 8.5% on large retail outlets in their area with a rateable value not less than £500,000 and the power to use the revenue collected to improve local economic activity, local services and facilities, social and community wellbeing and environmental protection.’
Council notes that within Bristol such a levy could raise up to £1.6 million from the city’s largest supermarkets alone and potentially a much larger figure from ‘all the large retail outlets’ referred to by the campaign (Council notes that supermarkets cannot legally be singled out for the purposes of the levy).
Council believes that the idea of seeking powers for a levy on retail outlets should be explored and requests that the Overview and Scrutiny Management Committee delegate this inquiry to the relevant scrutiny commission and report back to Council in September.
Although there was a hope amongst some that any money raised could, potentially, be used to persuade Supermarkets into areas crying out for such provision, some of the problems with the proposal were already obvious: not least that, although being touted as anti-supermarket, the proposal actually targeted all large retailers.

The issues became even clearer on perusal of the report prepared for today's meeting - and the notion of persuing such a policy became nuch less attractive. In particular, the following points jumped out at me:
  1. Despite originally being proposed by the Greens as being anti-Supermarket (and still marketed as such), only 32% of the affected businesses are Supermarkets.
  2. 44% of the businesses are in areas deemed to be in the 10% of most deprived areas in England - should we really be considering increasing costs on these?
  3. Although not broken down in the report, I reckon 20% or so of the affected businesses are in Business Improvement Districts - as such, should these not be treated as anchor tenants whose presence should (in theory) attract rather than repel other retailers?
Given that we had mooted using funds to support Supermarkets moving into those areas in desperate need of them - but this would potentially increase the inbalance highlighted above in terms of numbers of affected businesses in poorer areas. 

Six of the affected properties - all non-supermarket - are in the Broadmead "Business Improvement District" area, which is due for a renewal. Implementing such a plan could jeopardise the continuation of BID status if those businesses were to vote against on the basis of potential additional charges from the Levy.

There is also an "after-the-stable door" element to this: the supermarkets have, by and large, got out of the routine of opening large stores, and moved to the local/metro/central/express/M formats instead. This motion does nothing on that front. And whilst the big companies may suck up any charge that is imposed - in the short term a least - it's not hard to imagine that future decisions on where to locate could be affected on the basis other places outside the city bounds but within the city's sphere of spending would not impose such a charge...

Although it could be possible to look at setting a higher threshold - e.g. charging a levy only those 14 businesses with Rateable Values in excess of £1m (which would make it more Supermarket focused) - and/or implementing a system (if legally possible) of rebates on the levy for businesses in the most deprived communities, I think the committee is right in recommending that this is not proceeded with.

Andrew

4 comments:

Anna said...

It is true that only 32% of the affected businesses are supermarkets. (13/33). The other huge sector effected is fashion - 32% also. There is a huge need to open up the market in Bristol for smaller, more ethical fashion businesses to provide jobs for local people. There is an emerging market of creatives and local makers who find it very difficult to break into the retail sector because of monopolies held in the city centre by high-street fashion stores feeding disposable clothing made in cheap factories in Bangladesh. The retail levy could likewise be used to support the growth of these sorts of local businesses and re-balance the playing field.

Anna said...

SMEs have also been shown to create more jobs per £X thousand in turnover than multi-nationals, and are more adaptable to changing markets. Therefore making them better for local areas, jobs and improvement districts, from which they are barred by market monopolies. The retail levy would seek to create a more level playing field if the money were spent wisely on helping SMEs to grow and improve.

Anonymous said...

Wasn't it the LibDems who turned this from being something about supermarkets into being something about all retail.

Andrew Brown said...

Anna, your comments on Fashion are interesting - and Highlight a large number of issues that are lost when focussing just on Supermarkets, as the Local Works campaign does.

Whilst I disagree that the Large Retail Levy would achieve what you achieve, I do think we need to be more creative in encouraging small businesses - and in creative and imaginative uses of the many empty outlets in the Town Centre.

Anonymous: whilst the Local Works campaign is focused on Supermarkets, and the petition and the motion originally brought to Council had this in their titles, it isn't possible under law to just target supermarkets - as the Council discussion document makes clear, as did the LD amendment.

Having a higher threshold if £1m could make it more about supermarkets, but even the you would have other businesses affected, not least IKEA who would stand to pay an extra £283k p.a. which they wouldn't need to pay if they were to relocate to, say, Bath. Or Cribbs Causeway.