Business boom: A look at how business rates are affecting indies

Jade Burke

By Jade Burke

April 25th 2017 at 9:47AM
Business boom: A look at how business rates are affecting indies

The High Street has never been more competitive with more grocers and online stores cropping up than ever before, and with Government plans to increase business rates, could this spell the death of the indie retail scene? Jade Burke asks this month’s ToyShop UK listing how the hike will affect today’s toy retailers.

There’s no doubt that the UK’s High Street has suffered over the years with the development of more online stores and grocers taking over the retail landscape.

Despite this, we are still continuing to witness a bustling High Street, just look at Brighton and Bath’s indie retail offering where the streets are filled with shoppers on the lookout for a unique item that they cannot find in a local chain store.

However, the future of our High Street hangs in the balance, as the Government plans to revaluate business rates across the UK, which could see many store owners suffer miserably as prices look set to hike to an immeasurable amount.

Taking place from April 1st, 2017, the revaluation will update rateable values to reflect the market, which aims to ensure that business rate bills more closely reflect the property market and that all businesses are now getting a fair deal on rates.

This change is the first to happen for seven years, sending many independent business owners into disarray, as The Federation of Small Businesses (FSB) predicts that the average micro business based in London, which employs fewer than ten people, will have to pay around £17,000 to cover business rates once the change goes into effect from April.

Of course the change is expected, as the Government states that the revaluation is anticipated to happen every five years, however many trade bodies and retail gurus have warned the change could be deathly to the UK High Street.

It comes as no surprise that the changes will affect the indie toy crowd that has filled the High Street, with one retailer questioning if the Government even wants a High Street at all.

Commenting on the competitive nature of business, and the amount of hurdles indie stores already have to face, Julian Shelford, owner of Plymouth’s Final Frontier, believes that the increase in rates will substantially affect the indie scene.

“Let’s be honest, it is hard enough in business as it is, with the pension, increase in minimum wage, the fall of the pound and any increases in rent. Business rates is going to have a knock on effect on any business,” he tells ToyNews.

“To compete on the High Street is hard with parking charges, competition from the internet, out of town shopping centres and supermarkets – there has to be some benefit to smaller independents in any business.”

The unknown state of many owners’ businesses is a worrying aspect, but the Government has offered some respite in the form of its relief scheme.

The transitional relief it has always offered will still be in place for small and medium businesses, meaning that no small property will see more than a five per cent increase next year before inflation, due to the revaluation benefitting 500,000 small businesses.

It’s a helpful alternative, but will this really make a difference in the grand scheme of things?

Wendy Hamilton, owner of Grasshopper Toys, is less than hopeful. She declares: “The increases will signal the death knell for many small businesses.”

Joseph Kornbluh, owner of Trampoline and Parts, seconds this notion: “I don’t understand why they want small businesses to go out of business.”

Following the announcement of Brexit, already retailers have noticed a change with costing from suppliers oversees, coupled with the devaluation of the pound; 2017 has offered very little positivity to the UK’s indie retail scene.

This is a point that John Guiver, from Southport’s Models R Go, believes will greatly affect the small guys, who are constantly battling it out with larger chains.

“We’re still in austerity after the financial crash and in a period of uncertainty following Brexit. Let’s raise rates just to add to the burden,” he quips.

“And what about quarterly tax reporting to add to the paperwork. What brilliant incentives to get our High Streets repopulated.”

The new business rates will of course not affect everyone, and differ depending where each business is based. For example, London is expected to see an increase of 23.7 per cent, while the East Midlands will see prices spike by 7.4 per cent.

Meanwhile the North East and Wales will see prices decrease by 0.9 per cent and 2.9 per cent, respectively, while those based in North West and Yorks and Humber will remain unaffected.

This is certainly an optimistic outcome for some toy stores who are based in these areas, as Mitch Brown from Darths Hutt in Northwich will avoid the hike.

“My business rates will disappear, which will be a huge benefit to my business saving me over £550 a month, this I can put back into the business helping me build,” adds Brown.

“I know if I moved premises then it could be financially crippling for a small independent and it may affect my plans of moving to a larger shop in the future.”

Clearly the revaluation will make a difference for a small number of stores, but the changes will indefinitely damage many businesses on the High Street.

“Hopefully the Government will reconsider, otherwise not for every business it will stunt growth, and I’m not sure I want the country to become a huge warehouse,” explains Shelford.

Despite his plea for the Government to change its mind, it looks like the changes to business rates will be going forward following the Chancellor’s budget announcement last month. Philip Hammond delivered his first budget as Chancellor in March, where he revealed to business owners that he would not abolish business rates, but had ‘listened to the concerns’ of businesses.

To help ease the strain of the increases, Hammond has put in place measures that will see any business coming out of small business relief benefitting from a cap, which prevents the rate that it pays from going up by more than £50 per month. Meanwhile, Hammond said that he would provide local authorities with a £300m fund, to ‘deliver discretionary relief’ in local areas.

Paired together, these developments could offer some much needed relief for toy retailers. However, Peter Allinson, from Whirligig Chichester, believes that indies are here to stay despite the revaluation.

“It will be harder but if indies focus on being unique then they will have the edge with their customers,” cites Allinson.

Certainly indie stores do have an edge over corporate chains that churn out the same stock, but many retailers are still seemingly nervous about the change this month, as Karen Daw, owner of The Toy Cupboard, emphasises: “Business rates are already so high, I fear small independents will be greatly affected.”